THE  UNIVERSITY 

OF  ILLINOIS 

LIBRARY 

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c>-o. 


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UNIVERSITY  OF  ILLINOIS 


BULLETIN  No.  318 


COSTS  AND   MARGINS  AND  OTHER  RELATED 

FACTORS  IN  THE  DISTRIBUTION  OF  FLUID 

MILK  IN  FOUR  ILLINOIS  MARKET  AREAS 

BY  C.  A.  BROWN 


UKBANA,  ILLINOIS,  DECEMBER,  1928 


ACKNOWLEDGMENT 

The  author  expresses  his  appreciation  to  the  vari- 
ous agencies  and  individuals  whose  cooperation  made 
this  study  possible.  Special  recognition  is  due  those 
milk  distributors  who  submitted  their  records  to  the 
author  for  thoro  examination.  Valuable  service  was 
also  rendered  by  government  and  state  bureaus,  mu- 
nicipal health  departments,  chambers  of  commerce, 
milk  and  cream  jobbers,  condensing  and  cheese  manu- 
facturing companies,  creameries,  producer  and  dealer 
organizations,  transportation  agencies,  and  several 
other  organizations  interested  in  dairying. 


CONTENTS 

PAG" 

INTRODUCTION 173 

SOURCE    OF   DATA 174 

MILK  PRODUCTION 175 

Production  in  State  as  a  Whole 175 

Production  in  Chicago  District 179 

Production  in  St.  Louis  District 179 

Production  in  Peoria  and  Quincy  Districts 180 

Factors  Influencing  Rate  of  Production 181 

Seasonal  Variation  in  Production 182 

Seasonal  Variation  in  Butterfat  Content 187 

MARKETING  AGENCIES  AND  CONTRIBUTORY  ORGANIZATIONS...  191 

Milk-Bargaining  Associations 191 

Milk  Distributing  Agencies 192 

Transportation  Agencies 194 

Milk  Dealers'  Bottle  Exchanges 197 

Municipal  Health  Departments 200 

ASSEMBLING  AND  PROCESSING  PLANTS 203 

Country  Milk  Plants 204 

City  Pasteurizing  Plants 206 

STATISTICS  ON  CONSUMPTION 209 

Per  Capita  Consumption  in  Three  Markets 211 

Trend  in  Chicago  Sales 212 

Seasonal  Variation  in  Milk  and  Cream  Sales 214 

Daily  Variation  in  Sales 220 

Demand  for  Different  Sales  Units 225 

SURPLUS  MILK 231 

Causes  of  Dealer 's  Surplus 232 

Better  Transportation  Reduces  Dealer 's  Surplus 232 

Problem  Varies  with  Size  of  Market 23.'! 

Largest  Dealers  Carry  the  Surplus 233 

Effect  of  Dealers'  Surplus  on  Producer  Prices 234 

Amount  of  Surplus  in  Illinois  Markets 235 

Disposal  of  Surplus  Milk 236 

Skim-Milk  Disposal 238 

COSTS  AND  MARGINS  IN  MILK  DISTRIBUTION 239 

Distribution  of  the  Consumer's  Dollar 241 

Distribution  of  Consumer 's  Quart  Price 245 

Analysis  of  the  Expense  Dollar 246 

Profit  and  Loss  on  Various  Sales  Units 259 

Outlook  for  Distribution  Costs .262 


172  BULLETIN  No.  318 

PAGE 

FACTORS  AFFECTING  DEALERS '  MARGINS 263 

Intensity  of  Dairying 264 

Transportation  Advantages 264 

Butterfat  Content  of  Milk 265 

Surplus  Milk 266 

Standard  of  Milk  Quality 267 

Proportion  of  Different  Units  Sold 267 

Wages 267 

Efficiency  and  Net  Profit  of  the  Dealer 268 

Miscellaneous 268 

SUMMARY  AND  CONCLUSIONS 269 

APPENDIX  .  .  .   .  , 273 


COSTS  AND  MARGINS  AND  OTHER  RELATED 

FACTORS  IN  THE  DISTRIBUTION  OF  FLUID 

MILK  IN  FOUR  ILLINOIS  MARKET  AREAS 

BY  C.  A.  BROWN,  Associate  in  Dairy  Economy 

A  permanent  and  healthy  growth  of  dairying  depends  in  great 
part  upon  the  proper  application  of  economic  principles  within  the 
industry,  cooperation  among  its  various  divisions,  and  an  intelligent 
understanding  of  its  policies  by  the  public.  Undoubtedly,  controver- 
sies that  have  occurred  in  the  past  have  occasionally  caused  consumers, 
to  be  skeptical  regarding  milk  quality,  and  the  cry  of  "profiteer" 
has  at  times  resulted  in  a  partial  boycott  of  milk.  The  vast  number  of 
improvements  in  quality  and  service,  which  necessarily  have  raised 
costs,  appear  to  have  been  generally  overlooked  by  the  consuming 
public. 

In  the  period  previous  to  the  past  few  decades  the  marketing  of 
fluid  milk  was  a  very  simple  process.  Producers  delivered  their  own 
product  in  the  raw  state,  dipped  it  from  cans,  and  poured  it  into  re- 
ceptacles provided  by  consumers.  Centers  of  production  were  close  to 
markets.  Restrictions  relating  to  quality  of  product,  whenever  imposed, 
were  very  lenient.  Raw  milk  was  generally  preferred.  Wholesale 
milk  prices  were  low  and  consumers  received  milk  at  prices  ranging 
from  about  five  to  eight  cents  a  quart.  There  were  but  two  principal 
parties — producer  and  consumer — to  any  controversy  that  may  have 
arisen.  . 

The  rapid  growth  of  cities  produced  a  corresponding  enlargement 
of  fluid -milk  markets.  An  increasing  rate  of  consumption,  along  with 
the  increase  in  population,  further  increased  the  demand  for  milk. 
The  zones  of  production  gradually  enlarged,  their  limits  extending 
farther  and  farther  away  from  the  cities.  In  the  case  of  the  larger 
cities  production  centers  were  extended  so  far  from  markets  that  coun- 
try receiving  stations  became  essential  to  efficient  marketing. 

The  public  standard  of  milk  quality  has  gradually  become  higher, 
generally  resulting  in  regulatory  measures  requiring  milk  pasteuriza- 
tion and  sanitary  production  and  distribution.  In  most  localities  it 
has  become  impossible  for  the  individual  producer  to  market  his  own 
product.  Production  has  become  specialized;  marketing  commercial- 
ized. Intervening  agencies  have  gradually  supplanted  individual  pro- 
ducers as  marketing  agents,  and  problems  in  the  industry  therefore 
involve  now  not  only  producers  and  consumers,  but  also  a  number  of 
intermediary  parties. 

173 


174  BULLETIN  No.  318  [December, 

Specialization  and  increasing  complexity  among  the  various 
branches  of  the  dairy  industry  have  made  it  rather  difficult  for  any 
one  branch  to  become  familiar  with  the  operation  of  the  others,  or 
for  the  public  to  have  an  adequate  knowledge  of  the  industry  as  a 
whole.  Under  these  conditions  harmony  and  unity  of  action,  which 
are  essential  to  efficient  marketing  and  to  the  general  welfare  of  any 
industry,  have  not  been  so  prevalent  as  they  might  have  been. 

While  the  principal  object  in  the  present  study  was  to  obtain  data 
concerning  dealers'  costs  and  margins  in  the  four  large  markets1  for 
which  Illinois  farmers  and  dairymen  produce  milk,  discussion  of  other 
important  factors  in  the  field  of  distribution  is  placed  first  in  order 
that  the  reader  may  have  a  better  background  for  the  consideration  of 
the  material  on  costs  and  margins. 

This  survey  is  not  presented  as  a  highly  detailed  study,  for  it 
would  have  been  impossible  to  cover  so  large  a  field  within  the  allotted 
time.  It  is  believed,  however,  that  the  facts  here  presented  display  a 
fairly  definite  and  representative  picture  of  the  general  field  of  fluid- 
milk  distribution  in  the  four  principal  markets  supplied  by  Illinois 
producers,  and  will  open  the  way  for  further  detailed  analyses. 

SOURCE  OF  DATA 

The  actual  gathering  of  the  information  contained  herein  began 
about  April,  1926.  In  addition  to  a  general  summary  of  facts  concern- 
ing the  dairy  industry  in  the  state  as  a  whole,  detailed  information  was 
obtained  for  four  leading  markets,  Chicago,  St.  Louis,  Peoria,  and 
Quincy. 

The  work  was  greatly  facilitated  by  the  cooperation  of  milk  dis- 
tributors and  jobbers,  municipal  health  departments,  chambers  of  com- 
merce, government  bureaus,  transportation  companies,  producers  and 
dealers  associations,  and  other  agencies  indirectly  interested  in  the 
marketing  of  fluid  milk. 

The  records  of  the  larger  milk  dealers  located  in  the  centers  of 
consumption  were  the  source  of  the  material  on  costs  and  margins. 
In  practically  every  case,  several  weeks  were  spent  at  each  dealer's 
place  of  business  making  detailed  examination  of  all  records  pertaining 
to  marketing.  Production,  transportation,  processing,  sales,  and  cost 
records  were  among  those  that  were  scrutinized.  Examination  of  cost 
records  corresponded  in  a  general  way  to  balance  sheet  audits. 
No  attempt  was  made  by  the  investigator  to  check  the  valuations  of  the 
tangible  and  intangible  property,  the  values  on  the  balance  sheets  being- 
accepted  as  there  shown. 


1  In  a  "market"  is  included  the  area  served  by  distributors  whose  main  offices 
are  located  in  the  city.  Thus  the  suburbs  of  a  city  are  included  as  well  as  the 
city  proper. 


1928]  MILK  DISTRIBUTION  ix  FOUR  ILLINOIS  MARKETS  17.5 

MILK  PRODUCTION 

The  gradual  shifting  oi'  the  center  of  population  to  the  AVest  has 
contributed  materially  to  the  advancement  of  dairying  in  Illinois. 
The  rapid  growth  of  cities  within  and  near  the  borders  of  the  state 
has  developed  favorable  markets.  In  fact  the  general  distribution  of 
cities  over  the  state  has  made  it  possible  for  dairying  to  become  an 
important  enterprise  in  practically  every  county. 

The  nearness  of  production  areas  to  consumption  centers  in  Illinois 
tends  to  lower  certain  distribution  costs,  principally  transportation, 
and  thereby  makes  it  possible  for  the  producer  to  receive  a  larger  part 
of  the  consumer's  dollar.  With  the  state's  relatively  large  urban 
population,  a  large  portion  of  the  production  is  sold  at  the  more  re- 
munerative prices  of  fluid-milk  markets. 

Production  in  the  State  as  a  Whole 

Dairy  cows  have  been  decreasing  in  numbers  since  January  1,  1925. 
Estimates  made  at  the  beginning  of  the  years  1926,  1927,  and  1928 
were,  respectively,  1.0,  5.8,  and  7.7  percent  below  the  1925  estimated 
figures.  On  January  1,  1928,  there  were  968,000  milk  cows  in  the 
state.  The  distribution  of  these  is  shown  in  Fig.  1.  The  decline  in 
numbers  may  be  attributed  to  various  causes,  among  them  the  urgent 
need  of  cash  by  farmers,  resulting  in  a  relative  increase  in  the  sale 
of  veal  calves,  tuberculin  test  regulations,  increased  competition  with 
Wisconsin  dairy  sections,  and  lastly,  competition  of  dairying  with 
other  types  of  farming. 

Altho  there  are  no  recent  Census  figures  with  which  to  measure 
the  exact  increase  in  production  per  animal,  it  is  estimated  that  the 
recent  increase  has  more  than  counterbalanced  the  decrease  in  the 
number  of  animals,  as  it  did  in  the  five-year  period  1919  to  1924,  when 
the  state  increased  its  production  of  milk  17.45  percent.  Increases 
in  the  northern  and  central  sections  during  this  period  were  appre- 
ciably above  the  state  average  (Fig.  2).  The  growing  demand  of  the 
Chicago  market  for  fluid  milk  stimulated  production  in  these  northern 
counties.  Increases  in  the  central  section  may  be  attributed  to  an  exten- 
sion of  the  Chicago  market  into  a  few  counties  of  this  area,  to  the  grow- 
ing demand  of  cities  within  the  area,  and  to  a  trend  toward  more 
diversified  farming.  The  southern  section  has  not  had  the  same  rate  of 
growth  in  production  as  the  other  two  sections  of  the  state,  altho 
several  southern  counties,  because  of  good  transportation  facilities 
to  the  St.  Louis  market,  are  exceptions  to  this  general  statement. 

The  production  of  milk  in  Illinois  counties  and  those  adjacent  in 
bordering  states  is  shown  in  Fig.  3.  The  counties  in  the  northeastern 
section  of  the  state,  which  supply  the  Chicago  market,  produce  much 
more  milk  than  those  in  the  other  two  sections  of  the  state.  McHenry 


176 


BULLETIN  No.  318 


[December, 


county  produced  50,000  gallons 
of  milk  to  the  square  mile  and  a 
total  of  about  31  million  gallons 
for  the  year  1924.  Production 
in  the  central  and  southern  sec- 
tions is  rather  uniformly  dis- 
tributed, with  the  exception  of 
the  counties  which  supply  the  St. 
Louis  market;  these  produce 
about  80  percent  of  the  milk  dis- 
pensed in  this  market. 

Altho  there  were  fewer  milk 
cows  in  Illinois  in  1926  than 
in  1925,  the  total  1926  produc- 
tion was  approximately  3  per- 
cent larger,  being  nearly  528 
million  gallons.1  While  this  is 
a  large  amount,  still  it  represents 
a  production  per  square  mile 
that  is  small  compared  with  that 
of  Wisconson  and  eastern  Iowa. 
It  seems  logical  to  expect  that. 
Illinois  dairymen  will  always  en- 
counter very  intense  competition 
from  these  two  states,  especially 
from  Wisconsin,  in  which  dairy- 
.ing  apparently  is  the  most  re- 
munerative type  of  farming. 
Climatic  conditions  in  Wisconsin 
generally  are  not  so  favorable 
for  other  profitable  types  of  agri- 
culture. The  growing  season, 
for  example,  does  not  begin  soon 
enough  to  encourage  intensive 

truck  farming,  nor  is  it  long  enough  to  insure  a  mature  corn  crop  every 
year.  Silage,  however,  which  is  an  excellent  feed  for  dairy  cows,  can 
be  produced  during  the  shorter  growing  period.  Legumes,  such  as 
clover,  alfalfa,  and  certain  other  valuable  dairy  feeds,  are  well  adapted 
to  the  soil  and  climate.  Competition  from  Wisconsin  milk  producers 
on  the  Chicago  fluid  market  has  been  materially  increased  by  the 
adoption  of  improved  methods  of  transportation.  Hence  any  move- 
ment in  the  Illinois  part  of  the  Chicago  dairy  district  having  as  its 


FIG.    1.  — NUMBER    OF    MILK    Cows    IN 

ILLINOIS  COUNTIES  ON  JANUARY  1,  1928 

(Each  dot  represents  1,000  cows 

two  years  old  or  older) 

The  greatest  concentration  of  milk 
cows  occurs  in  the  northeastern  part  of 
the  state,  which  supplies  the  Chicago 
fluid-milk  market,  and  in  the  northwestern 
part,  which  produces  milk  chiefly  for 
cheese  manufacture.  (Data  from  Illinois 
Crop  and  Livestock  Statistics.) 


1  Circular  360,  Illinois  Crop  and  Livestock  Statistics,  issued  by  the  U.  S.  De- 
partment of  Agriculture  cooperating  with  the  Illinois  Department  of  Agriculture. 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


177 


object  the  expansion 
of  dairying,  would 
have  to  reckon  with 
intense  competition 
from  the  north. 

Because  of  the 
large  urban  popula- 
tion of  Illinois,  a  large 
portion  of  the  milk 
produced  is  used  for 
fluid  consumption. 
Cream  to  be  used  in 
butter  manufacture  is 
produced  mainly  by 
farmers  outside  of  the 
fluid-milk  sections. 
There  is  a  large  num- 
ber of  condensaries  in 
the  state,  and  cheese 
factories  utilize  much 
of  the  milk  produced 
in  the  northwestern 
part.  A  large  annual 
output  of  ice  cream  is 
needed  to  supply  the 
demand  in  the  cities. 
In  1924  the  state 
produced  58  million 
pounds  of  creamery 
butter,  94  million 
pounds  of  condensed 
and  evaporated  milk, 
and  13  million  gallons 

of  ice  cream.  These  major  products  by  no  means  constitute  the  total 
manufactured  output,  for  considerable  quantities  of  milk  powder, 
casein,  malted  milk,  and  soft  cheese  also  are  manufactured. 

The  climate  of  Illinois  is  well  adapted  to  the  dairy  industry,  and 
to  the  production  of  certain  legumes,  corn,  and  other  important  dairy 
feeds.  The  demand  of  several  of  the  large  markets  supplied  from  this 
state  is  steadily  increasing.  Dealers  and  producers  are  more  generally 
organized  in  their  respective  groups,  and  there  is  considerably  more 
understanding  and  cooperation  than  formerly  between  both  groups  of 
organizations,  tending  toward  arbitration  and  the  betterment  of  condi- 
tions in  the  industry.  These  conditions  seem  favorable  to  the  expansion 


FIG.  2. — CHANGES  IN  AMOUNT  OF  MILK  PRODUCED  IN 

COUNTIES  OF  ILLINOIS  DURING  THE  FIVE-YEAR 

PERIOD  1919-1924 

Production  generally  increased  thruout  the  state 
during  this  five-year  period,  the  average  increase  for 
the  state  as  a  whole  being  17.45  percent.  Decreases 
were  confined  largely  to  the  southern  counties.  The 
production  of  only  three  counties  declined  more  than 
20  percent.  (Based  on  U.  S.  Census  of  Agriculture, 
1920  and  1925.) 


178 


BULLETIN  No.  318 


[December, 


FIG.  3. — MILK  PRODUCTION  IN  COUNTIES  OF  ILLINOIS  AND  ADJACENT  STATES,  1924 
The  figures  indicate  the  number  of  thousands  of  gallons  of  milk  produced  per 
square  mile  in  each  county  during  1924.  Production  was  much  more  intensive  in 
northern  Illinois  and  in  central  and  southern  Wisconsin,  which  section  supplies  the 
bulk  of  milk  for  the  Chicago  market.  (Based  on  figures  from  U.  S.  Census  of 
Agriculture,  1925.) 


1928]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  179 

of  the  industry  in  Illinois,  tho  if  farmers  were  to  increase  milk  pro- 
duction too  rapidly,  such  a  supply  of  fluid  milk  could  be  created  that 
relatively  lower  prices  would  be  necessary  to  absorb  it.  The  large 
amount  of  labor  necessary  in  milk  production  is,  however,  a  factor 
which  tends  to  curb  rapid  expansion. 

Production  in  Chicago  District 

The  fluid-milk  markets  available  to  Illinois  producers  consume  the 
output  of  many  thousands  of  dairies.  The  Chicago  market  alone  now 
uses  the  production  of  approximately  35,000  dairy  farms.  This  milk, 
hoAvever,  is  not  all  purchased  from  Illinois  producers.  It  comes  from 
seven  states ;  namely,  Wisconsin,  Indiana,  Michigan,  Minnesota,  Iowa, 
and  Ohio,  tho  Illinois  and  Wisconsin  supply  more  than  80  percent  of 
the  total. 

Regardless  of  the  advantage  which  certain  Illinois  counties  enjoy 
because  of  nearness  to  the  Chicago  market,  and  their  ability  to  supply 
the  entire  demand  of  Chicago  consumers  it  is  very  doubtful,  with  the 
large  amount  of  competition  from  Wisconsin,  whether  the  state  will 
ever  supply  more  than  50  percent  of  the  total  consumption  of  this 
market.  At  the  present  time  it  supplies  about  40  percent.  A  slight 
increase,  however,  probably  will  occur,  as  it  is  expected  that  the  ma- 
jority of  those  dairymen  who  lost  their  market  when  the  tuberculin 
test  regulations  went  into  effect  \vill  eventually  regain  it.  Since  the 
state  is  in  the  heart  of  the  corn  belt,  where  dairying  is  somewhat  a 
matter  of  choice,  it  is  probable  that  higher  fluid-milk  prices  or  lower 
corn  and  hog  prices  would  encourage  the  production  of  fluid  milk. 

The  result  of  a  survey  of  3,620  dairy  farms  located  in  northeastern 
Illinois  and  southern  Wisconsin,  which  supply  the  Chicago  fluid-milk 
market,  is  shown  in  Table  1.  The  Illinois  farms,  48  percent  of  which 
were  operated  by  tenants,  averaged  ton  acres  more  per  farm  than  those 
in  Wisconsin.  As  would  be  expected  on  the  high-priced  Illinois  land 
near  Chicago,  the  percentage  of  acres  in  pastures  was  smaller  than  in 
areas  more  distant  from  the  city.  Furthermore,  in  dairy  sections 
more  intensive  dairying  would  generally  be  expected  on  the  higher 
priced  land,  a  fact  which  is  substantiated  by  the  data  showing  that 
there  is  one  head  of  cattle  for  each  5.5  acres  in  Illinois,  in  comparison 
with  6.1  acres  in  Wisconsin  farms.  There  were  more  heifers,  however, 
per  acre  on  the  Wisconsin  farms.  Practically  all  the  dairies  fed 
silage,  tho  the  percentage  following  this  practice  was  somewhat  greater 
in  Wisconsin  than  in  Illinois. 

Production  in  St.  Louis  District 

Approximately  80  percent  of  the  fluid  milk  consumed  in  St.  Louis 
is  produced  in  Illinois  and  20  percent  in  Missouri.  About  one  percent 


180 


BULLETIN  No.  318 


[December, 


TABLE  1. — SOME  FACTS  CONCERNING  NORTHERN  ILLINOIS  AND  SOUTHERN 
WISCONSIN  DAIRY  FARMS  IN  CHICAGO  DAIRY  DISTRICT,  1925 


Illinois 

Wisconsin 

Total  number  of  dairy  farms  surveyed  

2  699 

921 

Average  size  of  farms,  acres  

139 

129 

Percentage  of  landowners  operating  farms  

52 

61 

Percentage  of  tenants  operating  farms  

48 

39 

Ratio  of  pasture  acres  to  total  acres   

1:4.1 

1:3.8 

Total  cattle  per  dairy,  average  

25 

21 

Milk  cows  per  dairy,  average  

19 

15 

Heifers  over  1  year  old,  per  dairy,  average  

3 

3 

Heifers  under  1  year  old,  per  dairy,  average  

3 

3 

Ratio  of  purebred  sires  to  total  cattle      

1:71 

1:44 

Daily  sales  per  dairy,  average,  in  pounds 

325 

232 

Percentage  of  dairies  operating  milking  machines 

18 

18 

Percentage  of  dairies  using  silos  

85 

95 

of  the  Missouri  production  is  produced  in  the  dairies  of  the  city.  Ship- 
ments of  sweet  cream,  however,  are  made  occasionally  from  the  state 
of  Indiana.  In  1917,  according  to  the  data  contained  in  an  unpublished 
government  survey,  74  percent  of  the  market  supply  came  from  Illinois 
and  26  percent  from  Missouri.  The  dairies  located  within  the  city 
itself  supplied  20  percent  of  this  latter  amount,  all  of  which  was 
consumed  in  the  raw  state.  The  increasing  demand  for  pasteurized 
milk,  however,  has  gradually  reduced  the  sales  of  raw  milk,  exclusive 
of  certified  milk,  to  a  small  percentage  of  total  sales. 

Good  roads  and  excellent  transportation  facilities  undoubtedly  have 
been  influential  in  enabling  Illinois  producers  to  supply  approximately 
80  percent  of  the  fluid-milk  demand  of  this  market. 

Production  in  Peoria  and  Quincy  Districts 

Fluid-milk  production  for  the  Peoria  market  is  confined  to  three 
counties.  Of  the  total  market  requirements,  Peoria  county  supplies 
approximately  50  percent ;  Tazewell  county,  33  percent ;  and  Woodford 
county,  17  percent.  With  the  Peoria  market  situated  near  the  center 
of  this  production  area,  transportation  presents  relatively  fewer  dif- 
ficulties than  it  does  in  the  Chicago  and  St.  Louis  markets,  which  are 
located  at  one  edge  of  the  production  districts.  The  maximum  haul 
in  the  Peoria  district  is  only  50  miles. 

Even  tho  Quincy  is  located  just  across  the  river  from  Missouri, 
approximately  90  percent  of  its  fluid-milk  consumption  is  produced  in 
Illinois.  Here  again,  improved  surface  roads  have  been  instrumental 


1988] 


MILK  DISTRIBUTION  IN  FOUK  ILLINOIS  MARKETS 


181 


in  enabling  Illinois  producers  to  secure  practically  all  the  trade  of  a 
border  market. 

Factors  Influencing  Rate  of  Production 

The  quantity  of  milk  produced  responds  more  quickly  to  increases 
in  profits  than  does  the  supply  of  some  of  the  other  livestock  products. 
The  volume  of  milk  production  available  for  fluid-milk  sales  may  be 
increased  to  a  considerable  degree  by  changes  in  methods  of  feeding 
the  cows,  by  reducing  the  amount  of  milk  fed  to  calves,  as  well  as  by 
increasing  the  number  of  producing  animals.  Variations  in  the  total 
amount  of  milk  produced  that  result  from  increases  or  decreases  in 
the  number  of  dairy  cattle  are  much  slower  than  those  due  to  other 
factors  mentioned,  and  occur  gradually  in  response  to  protracted 
periods  of  relatively  high  and  low  prices. 

Annual  variation  in  milk  sales  per  farm  may  be  regarded  as  an 
approximate  measure  of  the  effect  of  various  economic  influences  upon 
dairying.  The  rate  of  production  in  the  Chicago  district  declined  con- 
siderably during  the  four-year  period  beginning  with  1917  (Table  2). 
The  average  yearly  production  for  this  period  was  about  11  percent 
below  the  fifteen-year  average  (1912  to  1926)  notwithstanding  the  fact 
that  during  the  same  four-year  interval  producer  milk  prices  were 
slightly  more  than  30  percent  higher.  During  the  war  period,  the 
prices  of  dairy  products  increased  relatively  less  than  the  prices  of 

TABLE  2. — YEARLY  VARIATION  IN  AVERAGE  MILK  SALES  PER  FARM  IN  CHICAGO 
DISTRICT  DURING  THE  FIFTEEN  YEARS,  1912  TO  19261 

(Based  on  receipts  at  a  group  of  plants  that  obtained  milk  for  fluid  distribution 

in  the  Chicago  market) 


Year 

Number  of 
farms 

Average  annual  sales  per  farm 

Pounds 

Percentage 
of  15-year  Average 

1912  

1  445 
1  584 
1  827 
2  013 
2  084 
2  019 
2  063 
2  265 
3  084 
3  344 
3  502 
3  665 
3  855 
3  855 
2  961 

81  233 
86  636 
90  696 
91  444 
90  260 
80  411 
71  418 
83  216 
77  951 
87  179 
88  705 
91  934 
98  533 
105  109 
92  463 

87  812.53 

92.5 
98.6 
103.3 
104.1 
102.8 
91.6 
81.3 
94.8 
88.8 
99.3 
101.0 
104.7 
112.2 
119.7 
105.3 

100.0 

1913 

1914  

1915  

1916  

1917  

1918  

1919  

1920  .    .  . 

1921  

1922  

1923  

1924  

1925  

1926  

Average  

'Farms  are  located  in  Illinois  and  Wisconsin. 


182  BULLETIN  Xo.  318  [December, 

other  commodities.  The  average  farm  wage  during  this  period  was 
above  the  prewar  level.  Not  only  wages,  but  high  feed  prices,  greatly 
increased  the  cost  of  producing  milk.  Other  types  of  farming,  involv- 
ing less  labor  than  dairying,  were  yielding  very  remunerative  returns, 
and  consequently  relatively  more  time  was  devoted  to  the  production  of 
other  commodities  at  the  expense  of  milk  production.  High  grain  prices 
tended  to  encourage  direct  marketing  of  grain  in  preference  to  indirect 
marketing  thru  livestock.  At  the  outbreak  of  the  war  favorable  veal 
and  beef  prices  encouraged  farmers  to  sell  more  old  cows  and  calves 
than  usual,  and  consequently  there  were  fewer  cows  on  the  farms  to 
produce  milk  during  the  1917-1920  period. 

In  1921,  when  readjustment  from  war  conditions  was  in  progress, 
and  when  other  types  of  farming  had  become  relatively  less  profitable 
than  dairying,  farmers  began  gradually  to  devote  more  time  to  milk 
production.  The  abnormal  demand  for  manufactured  milk  products 
created  by  the  war  had  abruptly  stopped,  and  producers  in  fluid-milk 
districts  wrere  soon  able  to  add  good  cows  to  their  herds  at  greatly 
reduced  prices.  Not  only  did  increased  numbers  of  producing  animals 
increase  the  production  per  farm,  but  lower  feed  prices,  together  writh 
the  adoption  of  better  production  methods,  increased  the  rate  of  pro- 
duction per  animal.  Thus  the  1921  farm  milk  sales  in  the  Chicago 
district  were  approximately  12  percent  greater  than  in  1920.  This 
rate  of  increase  was  greatly  curtailed  the  following  year  by  a  cut  of 
approximately  10  percent  in  producer  milk  prices  which  followed  a 
2-cent  reduction,  from  14  cents  to  12  cents,  in  the  retail  price  of  quarts. 
This  price,  however,  wras  raised  to  13  cents  in  January,  1923,  and  to 
14  cents  in  July,  and  as  a  result  the  1923  yearly  average  of  producer 
milk  prices  was  raised  about  37  percent  above  that  of  1922.  Both 
retail  and  average  producer  prices  remained  practically  unchanged 
during  the  twro  years  following ;  the  producer  prices  having  the  effect 
of  stimulating  production  to  a  level  much  above  the  average  for  the 
entire  period.  The  abrupt  decline  from  the  previous  year,  occurring 
in  1926,  was  the  result  of  the  eradication  of  cows  which  showed  a 
positive  reaction  to  the  tuberculin  test. 

Seasonal  Variation  in  Production 

That  there  is  considerable  variation  in  milk  production  among 
the  different  months  of  the  year  in  each  district  and  among  districts 
is  shown  by  Table  3  and  Fig.  4. 

A  large  spring  surplus  occurs  in  the  St.  Louis  dairy  region.  The 
average  maximum  production  for  the  four-year  period  1922-1925  oc- 
curred in  May  and  averaged  49  percent  above  the  monthly  average. 
The  minimum,  which  occurred  in  September,  was  38  percent  below  the 
monthly  average  for  the  period.  The  difference  between  the  high  and 


19X8] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


183 


TABLE  3. — SEASONAL  VARIATION  IN  MILK  PRODUCTION  IN  FOUR  DAIRY  DISTRICTS 

OF  ILLINOIS1 

(Figures  are  based  on  total  receipts  at  milk  plants  and  represent  percentage  of  aver- 
age month  during  period  specified)2 


Month 

Chicago 
1925 

St.  Louis 
1922-1925 

Peoria 
1926-1927 

Quincv 
1924-1926 

January  

89.6 

109.5 

79.9 

99.4 

February  

86.1 

104.8 

78.6 

95.8 

March  

99.7 

117.5 

90.6 

106.1 

April  

100.6 

120.5 

95.9 

108.9 

May  

119.8 

149.0 

129.1 

123.9 

June.  . 

119  1 

112  8 

136.5 

109  9 

July  

108.4 

93.1 

125.2 

106.5 

August  

99.6 

75.6 

112.9 

99.0 

September  

91.7 

62.3 

93.3 

86.2 

October  

96.0 

72.8 

88.6 

86.1 

November 

90  5 

82  4 

84.6 

85.2 

December  

98.9 

99.7 

84.8 

93.0 

Total  volume  (pounds) 
on    which    percent- 
ages are  based  

647,217,469 

117,491,991 

69,001,699 

15,174,190 

'Trend  removed.    2Not  corrected  for  varying  number  of  days  in  different  months. 

low  points  was  not  so  great  in  the  Peoria  district,  but  the  production 
was  more  irregular  than  that  of  the  Chicago  and  Quincy  districts, 
neither  of  which  had  a  variation  greater  than  40  percent. 

Favorable  weather  and  pasture  conditions  raised  the  spring  and 
early  summer  production  to  a  maximum  in  all  four  districts.  Spring 
freshening,  furthermore,  had  some  buoyant  effect  on  milk  flow  in  cer- 
tain districts.  Production  was  materially  reduced  during  the  late 
summer  and  early  fall  months,  when  the  weather  is  normally  hot  and 
dry,  the  pastures  scanty,  and  flies  plentiful ;  and  a  flow  near  the 
minimum  was  generally  reached  during  the  period  from  September 
to  November.  During  this  time  of  the  year  pastures  usually  must  be 
supplemented  with  other  feeds.  Thruout  this  season  the  milk  flow  is 
especially  dependent  on  the  general  management  of  the  herd,  which 
involves  such  factors  as  kind  and  amount  of  feed,  the  number  of  late 
fall-freshening  cows,  and  amount  of  care  given  the  animals. 

Differences  in  production  among  districts  were  also  largely  the 
result  of  variations  in  the  practices  just  mentioned.  Since  dairying 
is  the  major  type  of  farming  in  the  Chicago  territory,  we  should 
naturally  expect  efficient  dairy  methods  to  be  used  in  this  district.  One 
evidence  that  they  are  used  is  that  the  milk  flow  is  more  uniform  in 
this  district  than  in  other  Illinois  production  areas. 

Greater  uniformity  in  production  generally  enables  producers  to 
utilize  labor  more  efficiently  and  to  take  advantage  of  the  relatively 
higher  prices  of  fluid  milk  that  occur  in  most  markets  during  the  fall 


184 


BULLETIN  No.  318 


[December, 


and  winter.  Gross  returns  in  this  period  of  the  year,  however,  may 
not  be  large  enough  to  induce  producers  to  adopt  fall  freshening  and 
heavy  feeding  very  extensively,  for  even  tho  price  is  the  main  con- 
sideration it  is  not  the  only  one.  Conditions  on  the  farm  may  not  be 


Qercert 
150 
MO 
130 
110 
110 
100 
90 
80 
10 

Percent 

Jf.t 
Qum 
•Chic 
Peoi 

•>uis 
cy 

150 

/ 

\ 

ago 

~/a  _ 

HO 

y 

i 

130 

n 

\ 

N 

120 

/ 

»^^ 

/ 

V 

k 
L\ 

> 

i 

110 

X 

\ 

>  / 
/ 

V 

H. 

\ 
\ 

100 

*^ 

''/> 

S 

\ 

1 
I 

^ 

^ 

X^> 

90 

*^^i 

1  / 

/ 

\ 

> 

U^t 
—  -t 

s^K; 

60 

y 

\ 

\ 

/ 

7_ 

10 

60 



\ 

/ 

1,0 

10 
O 

3 

10 

o 

lli^fltf*SI^ 

FIG.  4. — SEASONAL  VARIATION  IN  MILK  PRODUCTION  IN  FOUR 

DISTRICTS  IN  ILLINOIS 

The  greatest  irregularity  in  production  occurs  in  the  St. 
Louis  and  Peoria  fluid-milk  areas,  where  production  per  farm 
is  smallest.  The  St.  Louis  district  produced  almost  two  and 
one-half  times  as  much  milk  in  the  season  of  maximum  pro- 
duction as  it  did  in  the  period  of  minimum  production.  See 
Table  3  for  time  intervals  on  which  the  data  are  based.  Aver- 
age monthly  production  equals  100. 

favorable  to  making  the  changes  necessary  to  obtain  greater  uni- 
formity in  production.  On  farms  where  dairying  is  incidental  to 
other  types  of  farming,  where  there  are  large  areas  of  pasture,  or 
where  feed  is  scarce,  the  higher  prices  are  less  effective  than  in  intens- 
ive fluid-milk  districts. 

The  effect  of  the  World  War  on  the  seasonal  production  of  milk 
in  the  Chicago  dairy  district  is  shown  by  Fig.  5  and  Table  39  of  the 
Appendix.  It  is  evident  that  the  spread  between  the  three  months  of 
highest  production  and  the  three  months  of  lowest  production  was 
greater  during  the  war  period  than  it  was  either  before  or  afterwards. 
Thruout  this  period  practically  all  types  of  farming  were  profitable, 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


185 


— some  more  so  than  dairying.  Partly  on  account  of  high  wages  and 
relatively  large  returns  for  agricultural  products  other  than  milk, 
there  was  a  greater  tendency  than  usual  for  dairy  farmers  to  diversify 
and  engage  in  less  intensive  types  of  farming  in  connection  with  dairy- 


Percent 
/30 

/ZO 
//O 
100 
90 
60 
70 
60 
50 
40 
30 
20 
/O 

o_ 


I    I    I    I    I    I    I    I    I    I    I    I    I 

Average  production  of  three  highest  months  in  each  yeor. 


Average  production  of  three  lowest  months  in  each  year. 


Difference  in  prod  between  three  highest  and  three  lowest  months 


Line  of  trend 


Average  monthly  producr/on  for  /f-yeor  period  =  IOO percent 


Percent 
/30 

/ZO 

//O 

/OO 

90 

80 

70 

60 

50 

40 

30 

ZO 

/O 

n 


FIG.  5.  —  SPREAD  BETWEEN  MAXIMUM  AND  MINIMUM  PRODUCTION  IN  THE 
CHICAGO  DAIRY  DISTRICT  EACH  YEAR  FROM  1912  TO  1926 

The  average  monthly  production  for  the  fifteen  years  is  indicated  as  100. 
The  area  above  and  below  this  line  shows  the  extent  to  which  the  average 
production  of  the  three  high  months  of  each  yrar  and  the  three  low  months 
deviated  from  the  fifteen-year  average.  The  World  War  added  greatly  to 
the  irregularity  of  production  between  seasons. 

The  lower  graph  is  another  expression  of  the  facts  shown  by  the  upper 
graph.  Here  a  single  curve  is  used  to  show  the  difference  between  the  three 
high  months  of  each  year  and  the  three  low  months.  Trend  removed.  (See 
Table  39,  Appendix.) 

ing,  usually  at  the  expense  of  milk  production.  Furthermore,  feeds 
were  relatively  high  in  comparison  to  returns  for  milk,  so  farmers 
were  prone  to  feed  less  heavily.  Consequently  in  the  months  of  April, 
May,  and  June,  when  the  rate  of  milk  flow  is  normally  less  dependent 
upon  care  of  the  herd  and  feeds  to  supplement  pastures,  the  proportion 
of  the  year's  production  was  greater  than  during  corresponding 


186 


BULLETIN  No.  318 


[December, 


months  in  years  preceding  or  following  the  war.  With  few  exceptions 
the  three  highest  months  for  the  fifteen  years  were  April,  May,  and 
June,  and  the  three  months  of  lowest  production  occurred  between 
August  and  November. 

Following  the  close  of  the  war,  when  grain  and  feed  prices  started 
to  recede,  heavier  fall  and  winter  rations  began  to  have  their  effect  in 
producing  a  more  uniform  flow  of  milk,  and  by  1921  normal  relation- 
ship was  again  established  between  winter  and  summer  production. 

Greater  uniformity  in  the  flow  of  milk  thruout  the  year  undoubt- 
edly would  make  relatively  higher  producer  prices  possible,  for  returns 
from  surplus  products  are  generally  lower  than  from  fluid  milk.  Altho 
prices  are  generally  higher  in  Illinois  districts  during  the  season  of 
least  production,  failure  of  production  to  respond  to  the  larger  re- 
turns seems  to  indicate  that  producers  as  a  whole  believe  that  the 
returns  are  not  yet  sufficient  to  warrant  a  change  in  practice. 

Generally  speaking,  considerable  attention  is  paid  to  uniformity  of 
production  in  intensive  dairy  districts.  In  the  Chicago  section,  where 
dairying  is  the  major  type  of  farming  on  many  farms,  production  per 
farm  is  larger  than  in  any  of  the  three  other  districts  studied  and  also 
more  uniform  (Table  4).  As  a  rule,  in  the  central  and  southern  sec- 


TABLE  4. — DAILY  MILK  PRODUCTION  PER  DAIRY  FARM  IN  FOUR  DISTRICTS 

OF  ILLINOIS 
(Figures  are  based  on  daily  milk  receipts  at  dealers'  plants) 


Month 

Chicago:  average 
for  1925-1926 

St.  Louis1:  average 
for  1922-1925 

Peoria:  1927 

Quincy:  average 
for  1924-1926 

Pounds 

Percentage 
of  average 
month 

Pounds 

Percentage 
of  average 

month 

Pounds 

Percentage 
of  average 
month 

Pounds 

Percentage 
of  average 
month 

277 
286 
287 
284 
330 
347 
303 
278 
266 
265 
265 
283 

95.8 
98.9 
99.2 
98.2 
114.1 
120.0 
104.7 
96.1 
92.0 
91.6 
91.6 
97.8 

120 
128 
129 
137 
164 
128 
102 
83 
71 
80 
94 
110 

107.0 
114.1 
115.0 
122.2 
146.2 
114.1 
90.9 
74.0 
63.3 
71.3 
83.8 
98.1 

71 
78 
83 
96 
115 
125 
112 
103 
84 
79 
78 
77 

77.4 
85.0 
90.5 
104.6 
125.3 
136.2 
122.1 
112.3 
91.6 
86.1 
85.0 
83.9 

157 
167 
172 
184 
205 
188 
174 
164 
141 
134 
139 
152 

95.3 
101.4 
104.4 
111.7 
124.4 
114.1 
105.6 
99.5 
85.6 
81.3 
84.4 
92.3 

March  

July  .                 .... 

Average  month  .  .  . 

289  .  25 

100.0 

112.17 

100.0 

91.75 

100.0 

164.75 

100.0 

Total  volume 
(pounds)  on  which 
figures  are  based 

949,868,753 

117,491,991 

35,003,017 

15,174,190 

'The  figures  representing  St.  Louis  production  are  based  upon  the  inner  district  only.    The  rate  of 
production  in  the  outlying  districts  is  lower. 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


187 


tions  of  Illinois,  dairying  is  carried  on  as  a  supplementary  type  of 
farming.  Fewer  cows  are  kept  on  farms,  heavy  winter  feeding  is  not 
so  extensively  practiced,  and  production  per  animal  is  less  than  in  the 
northern  part  of  the  state.  Such  conditions  are  not  generally  conducive 
to  a  uniform  flow  of  milk  thruout  the  year. 

Seasonal  Variation  in  Butterfat  Content 

The  monthly  variations  in  butterfat  tests  among  the  Chicago,  St. 
Louis,  Peoria,  and  Quincy  districts  can  readily  be  followed  by  refer- 
ring to  Table  5  and  Fig.  6.  While  it  is  beyond  the  scope  of  this  study 
to  ascertain  the  effect  of  all  factors  which  influence  milk  tests,  still  a 
part  or  all  of  the  following  conditions  undoubtedly  partly  account 
for  the  variations  shown  in  this  graph. 

The  low  tests  thruout  the  late  spring  and  early  summer  months 
shown  in  all  four  districts  are  due  to  the  heavy  feeding  of  grass  during 
this  period  and  the  high  milk  flow.  The  increase  in  test  immediately 
following  this  period  coincides  with  a  low  milk  flow  resulting  partly 
from  short  pastures.  Increases  thru  the  remainder  of  the  year  result 
from  a  variety  of  conditions.  In  the  fall,  many  dairymen  begin  to 
supplement  pastures  with  other  feeds.  As  winter  approaches  they 
continue  to  feed  more  heavily,  and  consequently  in  December  the  cows 
are  on  full  feed.  The  effect  of  the  fall  freshening  of  cows  is  not  to 
be  overlooked,  since  it  temporarily  increases  the  butterfat  content. 

TABLE  5. — SEASONAL  VARIATION  IN  AVERAGE  BUTTERFAT  CONTENT  OF  MILK 

PRODUCED  IN  FOUR  DAIRY  DISTRICTS  IN  ILLINOIS 
(Figures  represent  percentage  of  butterfat  in  milk  as  received  at  dealers'  plants) 


Month 

Chicago 
1926 

St.  Louis1 
1927 

Peoria 
1927 

Quincy 
1925 

January  

3.53 

3.8 

3.67 

3  92 

February  ~!  

3.48 

3.7 

3.56 

3  83 

March  

3.50 

3.7 

3  49 

3  69 

April  

3.55 

3.6 

3  55 

3  61 

May  

3.50 

3.5 

3.45 

3.67 

June  

3.44 

3.5 

3.49 

3  65 

July  

3.43 

3.5 

3  54 

3  67 

August  

3.48 

3.8 

3  66 

3  67 

September  

3.53 

4.1 

3  75 

3  71 

October  

3.64 

3.9 

3  86 

3  88 

November  

3.67 

4.0 

3.92 

4.05 

December  

3.68 

3.9 

3.93 

4.06 

Approximate   average 
monthly  receipts 
(pounds)  on  which  tests 
were  based  

32,778,577 

18,000,000 

2,695,683 

423,500 

'The  butterfat  content  of  milk  varies  greatly  in  different  sections  of  the  St. 
Louis  district,  owing  to  differences  in  breed.  The  higher  fat-producing  breeds  pre- 
dominate in  the  outlying  districts. 


188  BULLETIN  Xo.  318  [December, 

Another  fact  that  must  be  taken  into  consideration  is  that  these  tests 
are  based  on  receipts  at  dealers'  plants,  and  hence  some  of  the  varia- 
tion in  butterfat  test  in  the  Chicago  and  St.  Louis  markets  may  have 
been  the  result  of  different  producing  areas  being  drawn  upon  in 
different  seasons  of  the  year. 

The  tests  of  each  particular  district,  it  is  to  be  noted,  follow  about 
the  same  general  trend  thru  the  year. 

Measuring  Gross  Returns  on  Basis  of  Butterfat  Content. — Gross 
returns  for  milk  per  unit  of  butterfat  depend  largely  upon  the  butter- 
fat  content  of  the  milk.  Producers  are  generally  inclined  to  consider 
relative  returns  for  milk  on  a  butterfat  basis  when  making  comparisons 
among  butterfat,  fluid-milk,  cheese,  and  other  market  outlets.  The 
demand  of  the  market  is  a  very  important  factor  in  determining  the 
butterfat  standard  that  a  dairy  district  should  endeavor  to  approach 
in  order  to  harmonize  most  advantageously  with  economical  produc- 
tion. In  districts  in  which  the  butterfat  standard  of  the  producer 
payment  plan  is  3.5  percent,  we  find  the  majority  of  the  dairies  pro- 
ducing milk  with  a  butterfat  content  ranging  around  that  particular 
standard. 

The  3.5-percent  butterfat  standard  upon  which  milk  prices  are 
generally  based,  and  the  usual  price  differential  for  milk  testing  above 
or  below  3.5  percent  ordinarily  have  reacted  as  a  price  penalty  against 
the  production  of  milk  testing  higher  than  the  standard.  By  way  of 
illustration,  let  us  assume  that  the  base  fluid-milk  price  is  $2.50  per 
100  pounds,  with  a  5-cent  differential  for  each  point  above  or  below  a 
3.5-percent  standard.  One  hundred  pounds  of  3-percent  milk  would 
return  the  producer  $2.25,  a  rate  of  75  cents  for  each  pound  of  butter- 
fat  contained  therein;  100  pounds  of  4-percent  milk  would  return 
$2.75,  a  rate  of  68.75  cents  per  pound  of  butterfat;  while  5-percent 
milk  would  return  only  65  cents  per  pound  of  butterfat.  Briefly,  as 
the  butterfat  test  rises  above  the  standard,  the  average  return  per 
pound  of  butterfat  declines.  Rates  per  pound  of  butterfat,  when 
based  on  other  milk  prices,  are  also  shown  in  Fig.  7. 

Dairymen  may  feel  that  it  makes  little  difference  if  the  rate  per 
pound  of  butterfat  for  high-testing  milk  is  less  than  that  for  butterfat 
in  milk  with  a  low  test,  since  the  actual  returns  for  ICO  pounds  of 
4-percent  milk  are  larger  than  the  amount  received  for  an  equal  volume 
of  3-perccnt  milk.  It  is  necessary,  however,  to  take  into  consideration 
the  significance  of  the  fact  that  milk  flow,  as  a  rule,  varies  inversely 
with  butterfat  content.  That  is,  the  average  milk  flow  of  low-testing 
cows,  as  a  whole,  is  greater  than  that  of  high-testing  cows.  This  fact 
is  well  known  among  dairymen  and  needs  no  further  elucidation. 


19X8] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


189 


FIG.  6. — SEASONAL  VARIATION  IN  BUTTERFAT  CONTENT  OF 

MILK  IN  FOUR  ILLINOIS  DISTRICTS 
The  butterfat  content  is  lowest  during  the  surplus 
season,  when  production  is  highest.  The  maximum  varia- 
tion occurred  in  the  St.  Louis  district,  where  the  butter- 
fat  test  varied  from  3.5  percent  to  4.1  percent.  The 
graph  is  based  on  data  from  dealers'  testing  records  for 
one  year  in  each  dairy  district :  Quincy  and  Chicago, 
1925';  Peoria,  1927;  and  St.  Louis,  1927.  See  Table  5. 

Since  the  producer  with  a  high-testing  herd  will  have  a  lower  vol- 
ume of  production  per  cow  than  the  producer  with  a  low-testing 
herd,  the  rated  price  per  pound  of  butterfat  becomes  of  great  im- 
portance to  him.  On  the  basis  of  gross  returns,  the  prices  commonly 


190 


BULLETIN  No.  318 


[December, 


3.0  3.1   3.2   3.3  3.4   J.S  3.6    3.7  J.8   3.9  4.O  4.1  4.2   4.3   4.4  4S  46   4.7  4.8    4.9   5.0 
Percent  burterfot 


FIG.  7. — RATINGS  FOR  BUTTERFAT  IN  MILK  SOLD  AT  VARIOUS  FLUID-MILK 

PRICES  WITH  THREE,  FOUR,  AND  FIVE-CENT  DIFFERENTIALS 
From  the  above  graph  it  is  possible  to  ascertain  gross  ratings  per  unit 
of  butter  fat  in  100  pounds  of  fluid  milk  when  the  milk  is  sold  at  the  above 
prices.  Prices  are  based  on  a  3.5-percent  butterfat  standard,  with  differen- 
tials of  3,  4,  and  5  cents  for  each  point  above  or  below  the  standard.  When 
3.5-percent  milk  sells  at  $2.50  per  hundredweight,  the  butterfat  rating  is 
71.4  cents  a  pound.  If  the  milk  tests  3.8  percent  fat,  and  a  differential  of 
5  cents  a  point  is  being  paid,  the  rating  would  be  69.7  cents  a  pound  for  the 
butterfat.  The  graph  is  applicable  only  from  a  practical  standpoint,  for 
above  or  below  certain  prices  the  curves  reverse  upon  the  application  of 
particular  differentials. 

paid  for  fluid  milk  based  on  the  3.5-percent  standard  with  the  usual 
differential  tend  to  inflict  a  penalty  on  milk  with  a  high  butterfat 
content.  Net  returns  for  milk,  however,  depend  not  only  upon  gross 
returns  per  hundred  pounds  of  milk  but  also  upon  production  costs 
as  well;  but  if  production  costs  of  high-test  and  low-test  milk  are 
practically  the  same,  it  is  obvious  that  net  returns  will  be  proportionate 
to  gross  returns.1 

Some  dealers  have  created  a  consumer  demand  at  premium  prices 
for  milk  high  in  fat,  and  consequently  pay  prices  that  encourage  its 


*For  information  pertaining  to  feed  costs  of  production  based  on  butterfat 
content  of  milk,  refer  to  Circular  318  of  this  Station,  by  W.  L.  Gaines. 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  191 

production.  The  demand  for  high-testing  milk,  altho  yet  relatively 
small,  is  increasing  in  a  majority  of  the  large  markets,  and  many  far- 
sighted  breeders,  recognizing  this  fact,  are  endeavoring  to  raise  the 
butterfat  standard  of  their  herd  by  selection  and  breeding.  The  lower 
fat  producing  types  of  dairy  cattle  still  prevail  in  most  fluid-milk, 
cheese,  and  condensary  districts  of  Illinois,  while  the  higher  fat  yield- 
ing types  predominate  in  cream-producing  sections. 

MARKETING  AGENCIES  AND  CONTRIBUTORY 
ORGANIZATIONS 

The  more  important  agencies  that  engage  either  directly  or  indi- 
rectly in  the  process  of  marketing  are  producer  milk-bargaining  asso- 
ciations; distributing  agencies,  consisting  of  dealers,  jobbers,  and 
brokers ;  and  auxiliary  organizations  such  as  transportation  agencies 
and  bottle  exchanges.  In  addition  to  these  there  is  the  health  depart- 
ment which  specifies  the  conditions  under  which  milk  for  fluid  con- 
sumption shall  be  produced  and  marketed. 

Milk-Bargaining  Associations 

Producer  milk-bargaining  associations  are  organized  for  the  pur- 
pose of  obtaining  greater  economic  advantages  for  their  members. 
The  success  of  these  organizations  depends  mainly  upon  the  type  of 
leadership,  the  cooperation  of  the  individual  members,  and  the  amount 
of  service  rendered.  Under  the  guidance  of  capable  leadership,  they 
are  generally  considered  a  desirable  adjunct  to  marketing.  There  are 
several  of  these  organizations  operating  in  various  parts  of  the  state, 
some  achieving  greater  success  than  others. 

A  good  example  of  this  type  of  organization  in  the  state  is  the 
Illinois  Milk  Producers'  Association  at  Peoria.  This  association  began 
operations  in  October,  1926,  with  about  one  thousand  members,  under 
the  management  of  the  Dairy  Marketing  Division  of  the  Illinois  Agri- 
cultural Association.  At  present  there  are  about  1,100  members,  who 
produce  about  90  percent  of  the  total  production  of  the  Peoria  fluid- 
milk  district.  The  cooperation  given  the  association  by  producers  and 
dealers  has  enabled  it  to  render  a  very  valuable  service  to  milk 
marketing  in  that  particular  section. 

The  milk  marketing  plan  used  by  the  Association  was  devised  after 
an  inspection  and  study  of  various  plans  used  in  other  cities.  In  ac- 
cordance with  its  provisions,  milk  is  classified  on  the  basis  of  the  pur- 
pose for  which  it  is  to  be  used,  and  producer  milk  prices  are  based  upon 
the  market  value  of  the  different  milk  classes.  There  are  three  classi- 
fications. Class  1  includes  all  milk  sold  in  bottles,  both  wholesale  and 
retail ;  all  milk  sold  in  bulk ;  and  milk  from  which  wholesale  and  retail 


192  BULLETIN  No.  318  [December, 

bottle  cream  is  derived.  Milk  disposed  of  in  bulk  as  fluid  sweet  cream 
and  that  used  in  the  manufacture  of  condensed  whole  milk  and  soft 
cheese  containing  butterfat  is  included  in  Class  2.  Class  3  includes 
the  milk  used  in  manufacturing  butter  and  that  from  which  frozen 
cream  for  storage  is  derived. 

The  net  price  paid  producers,  ordinarily  called  the  pool  price,  is 
based  on  the  average  returns  for  milk  of  all  classifications.  Because 
of  the  lower  prices  paid  for  surplus  milk  than  for  other  milk  under  this 
scheme,  the  pool  price  becomes  relatively  lower  as  surplus  milk  in- 
creases and  correspondingly  higher  as  it  decreases.  The  prices  paid 
for  surplus  milk  are  based  chiefly  upon  the  general  level  of  manu- 
facturing markets,  and  hence  milk  dealers,  by  manufacturing  dairy 
products  from  surplus  milk,  are  enabled  to  compete  with  establish- 
ments making  the  manufacture  of  dairy  products  their  main  business. 
Dealers  are  thereby  encouraged  to  manufacture  dairy  products  more 
extensively,  and  in  so  doing  the  local  market  for  milk  is  expanded. 
See  Table  40  of  the  Appendix  for  prices  paid  in  the  Peoria  district 
based  on  the  different  classifications. 

The  following  constitute  some  of  the  more  important  obligations 
of  the  producer  to  the  Association : 

1.  To  deliver  all  milk  produced  in  such  form  as  agreed  upon  by  the  Associa- 
tion to  the  plant  or  other  destination  designated  by  the  Association,  with 
the  exception  of  that  used  for  home  and  farm  consumption. 

2.  To  establish  the  Association  as  sole  agent  for  handling,  manufacturing, 
and  marketing  of  all  milk  delivered. 

3.  To  authorize  the  Association  to  receive,  grade,  pool,   standardize,  manu- 
facture, or  sell  all  or  a  part  of  the  milk. 

4.  To  grant  a  commission  of  5  cents  per  hundred  pounds  for  milk  sold  by 
the  Association. 

5.  To  produce  and  keep  milk  under  sanitary  conditions  until  delivered. 

6.  To  permit  inspection  of  the  dairy  and  to  correct   conditions  regarded  as 
being  undesirable  by  the  Association. 

7.  To  submit  all  serious  controversies  as  to  grade,  weight,  and  test  of  milk 
to  the  Association  for  adjudication  and  settlement. 

8.  To  instruct  the  Association  to  collect  for  his  account  any  money  which  any 
person,  firm,  or  corporation  may  owe  for  milk  delivered  by  the  producer. 

9.  To  sell  milk  in  compliance  with  price  classifications  and  prices  arranged 
between  Association  and  buyers. 

Milk  Distributing  Agencies 

Dealers,  jobbers,  and  brokers  who  serve  as  connecting  links  between 
producer  and  consumer  are  generally  known  as  middlemen.  As  milk 
marketing  has  become  complicated,  these  intermediary  groups  have 
gradually  supplanted  individual  milk  producers  as  marketing  agents. 

Service  of  Dealers. — From  the  standpoint  of  scope  of  operation, 
retail  dealers  are  undoubtedly  the  most  important  of  the  three  groups. 


1923]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  193 

Their  service  usually  begins  upon  receipt  of  milk  in  the  raw  state  and 
ends  with  its  delivery  to  the  ultimate  consumer  or  local  retailer. 

A  dealer  may  supply  either  the  wholesale  or  retail  trade  or  both. 
The  wholesale  trade  consists  of  hotels,  restaurants,  schools,  grocery  and 
delicatessen  stores,  and  other  similar  establishments  that  purchase 
milk  in  large  quantities.  Retail  distribution  necessitates  house  to 
house  delivery,  generally  by  horse  and  wagon.  In  addition  to  dis- 
tributing milk,  dealers  have  sponsored  and  financed  the  major  portion 
of  the  advertising  of  the  past.  Furthermore,  they  may  manufacture 
as  well  as  distribute,  depending  upon  the  amount  and  disposition  of 
surplus  milk  that  they  handle.  During  the  season  of  heavy  production 
a  large  quantity  of  surplus  milk  is  manufactured  into  condensed  prod- 
ucts by  certain  distributors,  and  in  some  localities  distributors  make 
the  major  portion  of  the  ice  cream. 

Place  of  Jobbers  in  Milk  Trade. — The  jobber  purchases  milk  or 
cream  either  from  producers  or  wholesale  dealers  and  dispenses  it  to 
other  dealers.  A  large  volume  of  business  is  usually  required  to  sup- 
port middlemen  who  engage  only  in  the  jobbing  of  milk.  For  this 
reason,  they  are  generally  found  only  in  large  milk  markets.  Occa- 
sionally milk  distributors  and  dairy  manufacturers,  in  practically  all 
markets,  dispose  of  job-lots  of  milk  to  other  dealers,  but  since  they  do 
not  make  a  permanent  business  of  jobbing,  their  supply  is  somewhat 
irregular  and  hence  uncertain  from  the  standpoint  of  the  buyer.  Fur- 
thermore jobbers  sometimes  distribute  to  the  wholesale  trade. 

The  main  sources  of  supply  for  cream  jobbers  are  usually  areas 
outside  of  the  regular  fluid-milk  district,  where  milk  may  be  bought 
below  the  current  fluid-milk  prices.  Since  transportation  costs  favor 
the  shipping  of  a  concentrated  product,  cream  constitutes  the  bulk  of 
their  shipments.  Lower  transportation  rates,  resulting  from  the  use 
of  tank  cars,  have  enabled  jobbers  to  supply  other  markets  outside  the 
sphere  of  the  local  district  much  more  extensively  than  was  possible 
previous  to  the  introduction  of  this  method  of  transportation.  It  is  no 
longer  unusual  for  whole  milk  to  be  shipped  in  tank  cars  from  Illinois 
or  Wisconsin  to  distant  southern  markets.  Tank-car  shipments  of 
cream  and  ice-cream  mix  produced  in  mid-western  districts  are  occa- 
sionally shipped  to  eastern  points. 

The  extensive  growth  in  production  and  consumption,  as  well  as 
improvement  in  milk  transportation,  has  enabled  jobbers  to  render  a 
much  more  valuable  service  to  distribution  than  formerly.  They  arc 
often  relied  upon  to  supply  the  emergency  needs  of  milk  distributors. 
Distributors,  instead  of  carrying  a  large  amount  of  milk  in  excess  of 
the  regular  daily  demand,  may  restrict  their  purchases  to  normal  re- 
quirements and  depend  upon  the  local  jobber  for  milk  and  cream  when 
the  regular  supply  is  insufficient. 


194  BULLETIN  No.  31 8  [December, 

Milk  Brokers. — Milk  brokers  are  generally  found  only  in  our  larg- 
est cities.  In  Illinois  they  are  established  in  the  Chicago  market. 
They  do  not,  as  a  rule,  purchase  milk  outright,  but  simply  estab- 
lish contact  between  buyers  and  sellers  of  milk.  The  extent  of  their 
service  depends  principally  upon  the  amount  of  territory  that  may 
be  included  within  the  scope  of  their  operations.  As  is  generally  true 
in  respect  to  brokers  of  many  commodities  other  than  milk,  they  are 
able  to  render  their  greatest  service  when  it  is  possible  to  extend  their 
trade  transactions  beyond  the  local  market.  Previous  to  the  intro- 
duction of  refrigeration  and  the  tank  car  in  milk  transportation,  the 
operations  of  milk  brokers  were  confined  almost  entirely  to  the  local 
market.  With  the  present  transportation  facilities  it  may  become 
practical,  for  example,  for  brokers  to  establish  trade  connections  be- 
tween southern  dealers  and  Illinois  producers. 

Transportation  Agencies 

The  combined  efforts  of  milk  equipment  manufacturers  and  trans- 
portation companies  have  effected  valuable  improvements  in  milk 
transportation.  The  application  of  improved  temperature-control 
equipment  and  modern  methods  of  handling,  and  the  employment  of 
greater  economy  of  space  in  milk  shipments  enables  milk  to  withstand 
shipping  periods  of  one  or  two  days  without  appreciable  changes  in 
quality,  and  also  greatly  reduces  transportation  costs  per  unit  of 
volume. 

Two  very  outstanding  examples  of  modern  equipment  are  the  tank 
car  and  tank  truck.  They  not  only  furnish  more  volume  per  unit  of 
space  and  require  less  labor  in  loading  and  unloading,  but  are  much 
more  effective  in  protecting  milk  from  the  influence  of  outside  tem- 
peratures than  the  equipment  which  was  used  formerly.  It  is  evident 
that  the  use  of  this  type  of  equipment  has  great  possibilities,  for 
within  the  short  interval  that  has  elapsed  since  its  introduction  a 
large  portion  of  the  milk  supply  of  several  of  the  large  milk  markets 
has  been  shifted  to  this  method  of  transportation. 

Motor  transportation  has  gradually  supplanted  the  horse  and  wagon 
as  a  means  of  individual  direct  delivery  of  milk  to  pasteurizing  plants 
or  receiving  stations.  Considerable  time  has  been  saved  by  farmers 
who  use  the  automobile  and  truck.  The  producer  only  a  few  miles 
from  the  plant  may  deliver  milk  daily  by  motor  and  return  to  the 
farm  within  an  interval  of  approximately  half  an  hour,  while  two  or 
more  hours  would  be  required  with  horse  and  wagon.  As  a  rule  indi- 
vidual delivery  of  milk,  however,  is  practical  only  for  farmers  who 
live  near  the  plant  or  receiving  station. 

Collective  delivery  of  milk  has  proved  practical  in  many  localities, 
especially  where  rail  facilities  are  inadequate.  Producers  club  to- 


1928}  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  195 

gether  and  select  one  of  their  number,  or  employ  someone  outside  the 
group,  to  deliver  milk  for  the  entire  group.  In  districts  where  the 
laily  production  is  small  enough  so  that  one  man  can  handle  the 
jutput  of  a  dozen  or  more  dairies  there  is  more  saving  than  in  in- 
tense dairy  regions.  Collective  delivery  is  extensively  used  in  the 
Peoria  district,  where  there  are  about  a  hundred  collection  routes 
operating  with  an  average  load  of  approximately  1,200  pounds  of  milk 
per  route.  The  rout  emeu  enlarge  their  income  by  hauling  other 
commodities  as  well  as  milk.  The  plan  may  be  used  to  haul  milk  to  rail 
loading  points,  country  receiving  stations  or  plants,  and  to  city  plants. 

Dealers  who  transport  milk  by  motor  may  do  so  in  cases,  cans,  or 
tanks.  A  large  percentage  of  the  milk  supply  produced  within  65 
miles  of  Chicago  is  hauled  by  motor.  In  the  St.  Louis  district  more 
than  three-fourths  of  the  total  fluid  milk  used  is  taken  to  market  in 
this  manner.  Peoria  trucks  practically  all  of  its  milk.  This  is  also 
true  in  Quincy,  which  ships  only  about  5  percent  of  its  milk  by  rail. 
The  fact  that  the  maximum  haul  is  approximately  50  miles  makes  it 
practically  impossible  in  these  two  districts,  under  present  conditions, 
for  any  other  system  of  transportation  to  compete  successfully  with 
the  method  of  trucking  milk  in  cans  from  the  farm. 

In  the  trucking  zones  of  Chicago  and  St.  Louis,  where  a  much 
larger  milk  supply  is  available  and  where  the  maximum  truck  haul  is 
more  than  a  hundred  miles,  the  tank  truck  has  partly  supplanted  the 
trucking  in  cans.  Tank  trucking  is  a  much  more  economical  method 
of  transportation  than  trucking  in  cases  or  cans  wherever  the  volume 
to  be  hauled  is  sufficient.  It  makes  necessary,  however,  the  establish- 
ment of  country  receiving  stations,  an  expense  that  may  sometimes  be 
avoided  when  milk  is  trucked  in  cans.  Not  only  is  it  possible  to  haul 
a  much  larger  volume  per  load,  but  less  labor  is  required  in  loading 
and  unloading. 

Dealers  wrho  bottle  all  milk  in  the  country  are  of  course  unable 
to  use  the  tank  car  for  city  hauling.  In  the  St.  Louis  district, 
where  a  large  portion  of  the  milk  supply  is  bottled  in  the  country, 
milk  is  hauled  in  large  trucks  which  carry  approximately  270  cases  of 
12  quarts  each.  Even  tho  bottling  milk  in  the  country  entails  higher 
transportation  costs,  the  added  expense  is  counteracted  by  cheaper 
labor  in  the  country  plants.  In  the  Chicago  district,  where  country 
plant  labor  is  unionized,  the  tendency  has  been  to  reduce  the  amount 
of  milk  bottled  in  the  country.  This  has  been  true  especially  since 
the  introduction  of  modern  methods  of  transportation.  Consumer  in- 
difference to  country  bottled  milk  has  also  been  a  factor. 

Very  little  milk  has  been  transported  by  rail  in  the  small  dairy 
districts  since  the  development  of  improved  roads  and  motor  trans- 
portation. Individual  shippers,  who  produce  milk  for  small  markets, 


196  BULLETIN  Xo.       -  [December. 

generally  hav.  31  <*eam  lines  to  develop 

tc  a  ill  compete  with  other  methods  of 

Some  '••:  rail  shipments,  however. 

Q  in  small  dairy  distri  ta 

I          tensr       [airy  seel       -  the  number  of  producers  is 

_  sid  -   ilk  is  shipped  direct  by  rail,  by  individual  pro- 

M  an  10  percent  of  tb   Si    L    lia  ra]     :     is  -  ipped 

direct  I  lacers.     During  July.  192S.  there  were  ap- 

_  _  dividual  shippers  sending  milk  to  the  Chicago 

market.    There  will  always  be  some  producer-         se  circumstances  will 

favor  this  method  and  the  number  in  the  _ro  district  has  probably 

p  the  minimum.     Individual  shipments  are  usually 

sjgag      ars    vithout  refrigeration,  a  condition  which  is 

long    distance  hauls.     The  temperature  of  the  milk  is 

:itrol  in  the  summer  time,  shipments  during  th,  t  season 

being  exposed  many  times  to  the  hot  sun  at  the  station  platform  and  to 

<  in  baggage  cars.     In  large  markets  small  dealers 

•lo  not  operate  country  re<  _  stations  obtain  a  large  portion 

.  -  ". '"'ply  from  individual  <.:          -  .ippers. 

:          stal       -    which  on  accouir  n,  insufficient 

voluir.  lo  not  warrant  tank-car  shipments,  ship  their 

milk  by  rail  in  cans  to  the  city  processing  plants.     In  the  Chicago 

i'-t  the  major:1  si      <>ns  are  lo  "tore  than  65  miles 

from  the  city,  the   greatei        rtion  of  the  milk  received  at  stations 

"-mile  zone  being  trucked  to  market.     Bottling  plants 

similarly  loea*          -       -     rail  lines  to  ship  milk  to  market.     The  cost 

ingl  :>ttled  milk  to  the  Chicago  and  St.  Louis  markets 

from  country  plants  averages  more  than  twice  as  much  as  the  cost  of 

-_•  .lion  can  shipments  in  cars  (Table  7   . 

The  introduction  of  the  tank  car  into  the  field  of  milk  transporta- 
tion has  exerted  a  great  influence  upon  dairying,  particularly  in  cer- 
tain localiri^.  Approximately  55  percent  of  Chicago's  total  supply 
is  brought  to  market  in  them  (Table  6).  Daily  shipments  in  tank  cars 
to  Chicago  are  made  from  milk  production  centers  more  than  300  miles 
distant.  The  nauls  range  from  about  25  to  360  miles.  More  than  250 
of  these  cars  are  now  operating  in  the  Chicago  district,  the  majority 
of  them  being  used  for  bringing  whole  milk  from  the  country  receiving 
stations  to  city  bottling  plants.  Even  cities  in  the  south  have  been 
served  with  milk  from  the  Chicago  district  by  means  of  these  cars ; 
and  it  is  doubtful  whether,  without  their  use.  Chicago  dealers  could 
have  obtained  an  adequate  supply  of  milk  from  tested  cows  at  the  time 
the  ordinance  was  enforced  which  required  all  milk  sold  in  Chicago 
to  come  from  cows  reacting  negatively  to  the  tuberculin  test. 

Every  car  is  equipped  with  two  glass-lined  tanks,  each  tank  having 
a  capacity  of  about  25,000  pounds.  These  tanks  are  well  insulated. 


19S8]  MILK  DISTF.IBL 

TABLE  6. — MANNER  OF  TRANSPORT:  •  .          ''  :  •    -•  .  :     .    _• 


M  ••     - 


Pa     ataf 

-   -      -      • 


Tank  cars . 
Tank  trucks.  .  . 
Enclosed  truck- 
Rail  (bottled  and  car 


2 
L7 

'   - 


100.0 


figures  obtained  from  records  g  - 

making  it  possible  to  haul  milk    or  miles  wil 

temperature.     Tests  have  shown  the  av       _  _•    -  -  _      •• 

_     es  to  a  hundred  miles  under  norm;  .  ' 

facturers  are  now  _  •  re  to  buy 

them.     This  is  esjx       .  •  _       3  1     a  - 

limited  amount  of  capital.     The  in:-  *rever,  is  not  larg 

sidering  the  utility  and  durability  <  tr  and  tl  .        *rans- 

portation  costs  tha-  result     .  rik-ear  rates  1 

mately  one-third  lower  than  10- gallon  c  tes  (Tal       7   . 

Aside  from  the  advantaa 

:••  in  loading  and  unloads.  -  milk  ma 

pumped  into  and       I         'hem.     There  are.  of  course,  limi'   lions  1 
their  Qfi          '  .ving  to  their  very  introduction,  many  dealers  are 

not  wholly  prepared  for  their  immediate  adoption  on  a  L:- 
Xot  all  city  milk  plants  are  located  on  rail  switch-  s  £ 
unloading  directly  from  the  car  into  the  holdine  the  plan* 

are  all  of  the  receiving  stations  situate  I  fi          *o  have  •  ss  1 

rail  transportation.     Large  central  statioi> 

structed  at  rail  shipping  points,  and  milk  from  stations  not  rably 

located  for  rail  transportation  may  be  trucked  in  tank  trucks  to  the 
central  rail  shipping  center.     In  districts  where  the  daily  recei:  tfi 
a  station  are  not  larere  enough  to  approach  tank-car  capacity,  tank 
trucks  may  be  used  to  truck  the  milk  from  two  or  more  smalle: 
tions  to  the  central  shipping  station  and  thereby  make  it  possible  to 
load  the  car  to  its  rated  capacity. 

Milk  Dealers'  Bottle  Exchanges 

In  the  process  of  city  milk  distribution,  milk  hot:  - 
from  the  owners  in  a  variety  of  ways.  Retail  and  wholesale  milk 
buyers  may  purchase  milk  from  several  different  sources,  either  di- 
rectly from  dealers  or  indirectly  thru  stores.  The  routemen  generally 
do  not  take  the  time  to  inspect  the  name,  brand,  or  trademark  on  the 
bottle,  but  collect  all  that  are  left  for  them.  Milk  bottles  often  pass 
into  the  hands  of  traders  and  may  be  sold  to  unscrupulous  milk 


198 


BULLETIN  No.  318 


[December, 


TABLE  7. — RAILROAD  RATES'  FOR  TRANSPORTING  MILK  FROM  OUTLYING  SHIPPING 
POINTS  TO  CHICAGO  AND  ST.  Louis,  APRIL  1,  1928 


Town 

Miles 
by  rail 

Cents  per  100  pounds 

Percentage 
tank  rate  is 
of  can  rate 

Cases2 

10-gallon 
cans 

Tank  car 
40,000  pounds 
minimum 

To  Chicago  from: 
Palatine    .     .  .  111. 

26.1 
45.0 
46.0 
50.6 
52.0 
54.0 
60.9 
67.7 
85.0 
85.4 
86.0 
89.0 
91.1 
106.0 
119.6 
121.8 
125.6 
126.0 
127.0 
130.0 
151.0 
158.0 
184.2 
195.5 
204.0 
258.3 
275.0 

19.0 
25.0 
25.0 
32.0 
40.0 
41.0 
49.0 
58.0 
62.0 
76.0 
98.0 
101.2 

46.5 
100.8 
83.3 
52.3 
83.3 
54.3 
60.1 
54.3 
106.6 
64.0 
106.6 
65.9 
62.0 
65.9 
71.7 
81.4 
71.7 
127.9 
120.2 
93.0 
127.9 
127.9 
147.3 
151.2 
141.5 
170.5 
170.5 

69.8 
71.7 
81.4 
79.5 
83.3 
83.3 
89.1 
93.0 
96.9 
102.7 
112.4 
114.3 

31.4 
34.9 
31.4 
33.7 
31.4 
34.3 
34.3 
34.3 
45.9 
37.8 
45.9 
36.6 
40.1 
44.8 
45.4 
44.8 
45.4 
45.4 
51.8 
45.4 
55.2 
45.4 
50.0 
50.0 
60.5 
57.6 
61.6 

30.2 
31.4 
34.9 
34.3 
37.8 
36.1 
37.8 
39.5 
41.9 
44.2 
47.7 
49.4 

21 
21 
21 
21 
21 
21 
24 
24 
24 
24 
24 
24 
24 
25 
27 
27 
28 
28 
28 
28 
31 
31 
33 
33 
34 
37 
37 

66.9 
60.2 
66.9 
62.3 
66.9 
61.2 
70.0 
70.0 
52.3 
63.5 
52.3 
65.6 
59.9 
55.8 
59.5 
60.3 
61.7 
61.7 
54.1 
61.7 
56.2 
68.3 
66.0 
66.0 
56.2 
64.2 
60.1 

Manteno            111. 

Plato  Center  .  .  111. 
Maple  Park  .  .  .  111. 
Burlington.  .  .  .111. 
Spring  Grove.  .111. 
Silverlake.  .  .  .  Wis. 
Hebron   111. 

Teegarden  .  .  .  Ind. 
Mukwonago    Wis. 
Monterey.  .  .  .Ind. 
Avalon             Wis 

Janesville.  .  .  .Wis. 
Waukesha.  .  .Wis. 
Freeport   .      .   111. 

Slinger  .            Wis. 

Kewaskum  .  .  Wis. 
Lena  111. 

Servia   Ind. 

Adell  Wis. 

Garrett            Ind. 

Blanchardvillc  Wis. 
Appleton  ....  Wis. 
New  London  .  Wis. 
Holgate           Ohio 

Arpin  Wis. 

Waterloo.  .  .  .Iowa 

To  St.  Louis  from: 
O'Fallon   ....  Mo. 

Lebanon     ...   111. 

Bunker  Hill.  ..111. 
Trenton  ....     111. 

Breese                111. 

New  Douglas.  .  111. 
Carlyle  111. 
Hillsboro    ....  111. 

Irving  111. 

Ramsey  111. 

Westervelt  111. 
Effingham  ....  111. 

'Obtained  from  company  tariff  sheets.     2Cases  may  contain  12  quarts,  24  pints, 
or  48  half-pints.     Both  case  and  can  rates  are  for  less  than  carlots. 

dealers,  who  make  a  practice  of  using  bottles  marked  with  trade  names 
or  insignia  other  than  their  own. 

Milk  dealers  in  large  milk  markets  generally  have  considerable  diffi- 
culty in  retrieving  bottles  wliich  have  been  misplaced  or  have  otherwise 


1528}  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  199 

passed  from  their  possession,  unless  some  effective  means  is  provided 
for  such  a  purpose.  In  an  endeavor  to  cope  with  such  a  situation, 
dealers  in  some  markets  have  formed  organizations,  generally  known 
as  bottle  exchanges,  which  recover  stray  milk  bottles  and  return  them 
to  their  rightful  owners.  Such  organizations  usually  prohibit  mem- 
bers from  using  any  bottles  other  than  their  own.  They  also  are  in- 
strumental in  obtaining  from  dealers  outside  of  the  organization  bottles 
belonging  to  members  of  the  organization.  This  is  possible  because  of 
laws  and  ordinances  requiring  that  dealers  refrain  from  using  bottles 
branded  with  markings  other  than  their  own  in  dispensing  milk.  If 
some  agency  did  not  intervene  in  this  way,  a  small  percentage  of 
dealers  might  provide  practically  all  the  bottles  used  in  a  particular 
locality. 

The  history  of  the  bottle  exchanges  shows  that  success  depends 
largely  upon  type  of  management,  the  spirit  of  cooperation  of  indi- 
vidual members,  and  the  number  of  members.  It  is  generally  con- 
sidered essential  that  the  total  membership  of  a  milk  dealer's  bottle 
exchange  represent  the  major  portion  of  the  distribution,  otherwise 
the  exchange  may  find  difficulty  in  accomplishing  the  purpose  for 
which  it  was  organized. 

Since  its  organization  in  1919  the  Chicago  Milk  Dealers'  Bottle 
Exchange  has  been  successful  in  developing  an  annual  exchange  of 
more  than  57  million  bottles.  For  the  past  six  years  this  organiza- 
tion has  delivered  a  yearly  average  of  more  than  42  million  stray 
bottles  to  the  milk  dealers  of  the  city  (Table  8).  Under  the  terms  of 
agreement,  each  member  is  permitted  to  purchase  one  share  in  the 

TABLE  8. — BOTTLES  RETURNED  ANNUALLY  TO  CHICAGO  DEALERS  BY  MILK  DEALERS' 
BOTTLE  EXCHANGE,    1922-1927 


Year 

Bottles  returned 

1922.  . 

28  121  155 

1923     .  .       

33  622  267 

1924                

37  911  794 

1925 

46  320  898 

1926 

48  638  691 

1927  

57  662  117 

Average  

42  046  154 

NOTE. — See  Table  46  in  the  Appendix  for  data  on  losses  of  bottles  and  other 
containers  in  1926. 

Exchange  for  each  milk  wagon  license  required  and  obtained  in  his 
particular  business.  The  dealer  is  required  to  sign  a  written  agree- 
ment not  to  use  in  his  business  bottles  branded  with  any  name,  brand, 
trademark,  or  symbol  other  than  his  own,  nor  to  authorize  or  will- 
ingly permit  other  dealers  to  use  bottles  branded  with  his  markings. 


200  BULLETIN  No.  318  [December, 

He  also  agrees  to  permit  representatives  of  the  Exchange  to  search 
for,  inspect,  and  collect  all  bottles  branded  with  markings  other  than 
his  own.  The  first  violation  of  any  part  of  the  agreement  relative 
to  misuse  of  trademarks  makes  the  dealer  liable  to  a  fine  of  not 
to  exceed  $100,  and  a  second  violation  may  result  in  a  cancellation  of 
the  contract  for  the  Exchange's  services.  In  collecting  bottles,  it 
rarely  happens  that  much  resistance  is  encountered,  but  when  such  a 
condition  arises  and  cannot  be  overcome  without  legal  procedure,  a 
writ  of  replevin  is  generally  served  upon  the  illegal  possessor. 

After  the  bottles  have  been  assembled  at  the  exchange  plant  and 
those  of  each  dealer  separated,  they  are  delivered  to  the  original 
owner,  who  is  charged  one  and  one-half  cents  per  bottle  for  the  service. 
The  dealer  in  turn  receives  three-fourths  of  a  cent  each  for  all  bottles 
other  than  his  own  that  are  accepted  by  the  organization. 

In  the  Chicago  market  the  most  serious  difficulties  which  formerly 
resulted  from  the  use  of  milk  bottles  have  been  surmounted.  Prac- 
tically all  the  dealers  are  members  of  the  organization  and,  with  few 
exceptions,  comply  with  its  provisions.  Unscrupulous  dealers  who 
use  bottles  other  than  their  own  arc  rare  exceptions. 

Municipal  Health  Departments 

The  prime  consideration  in  a  food  for  human  consumption  is  its 
wholesomeness.  This  is  especially  true  of  milk,  which  is  universally 
regarded  as  being  indispensable  to  child  growth  and  development. 
Public  interest  in  the  wholesomeness  of  food  and  drink  has  resulted  in 
the  creation  of  municipal  health  departments  in  our  larger  cities.  The 
service  rendered  by  a  well-organized  health  department  and  the  re- 
sponsibility of  such  a  department  to  the  public  are  immeasurably 
great.  Recognition  of  these  facts  by  municipal  health  authorities  has 
greatly  reduced  the  death  rate  in  our  large  cities. 

A  large  portion  of  the  time  and  effort  of  health  bureaus  is  spent  in 
the  creation  and  enforcement  of  regulatory  measures  which  tend  to 
the  development  and  maintenance  of  wholesomeness  in  milk.  The 
past  five  years  have  witnessed  remarkable  accomplishments  in  this  di- 
rection in  Illinois  markets. 

By  far  the  larger  part  of  all  the  milk  consumed  in  the  large  mar- 
kets of  the  state  is  pasteurized,  as  shown  by  the  data  in  Table  9.  Even 
in  cities  where  pasteurization  is  optional,  pasteurized  milk  is  gradually 
supplanting  raw  milk  in  response  to  public  preference.  It  is  gen- 
erally true,  within  certain  limitations,  that  the  larger  the  city,  the 
greater  the  precautions  which  are  taken  in  handling  milk.  In  most 
of  these  larger  markets  where  pasteurization  is  compulsory,  frequent 
checks  are  made  to  determine  the  efficiency  of  pasteurization.  Pasteur- 
ization temperature  records  are  kept,  and  milk  samples  procured  by 


MILK  DISTRIBUTION  ix  FOUR  ILLINOIS  MARKETS 


201 


TABLE  9. — MISCELLANEOUS  DATA  PERTAINING  TO  QUALITY  OF  MILK'  CONSUMED  IN 
ST.  Louis  AND  CERTAIN  ILLINOIS  CITIES,  JANUARY  1,  1928 


Cities 

Number  of 
milk  pas- 
teurizers 

Percentage 
of  milk 
pasteurized 

Prevailing 
test  of  milk 
consumed 

Compulsory 
pasteuriza- 
tion 

Tuberculin 
test 
ordinance 

Population 
estimate 

Aurora  

6 

100 

Yes 

Yes 

47  000 

Bloomington 

3 

90 

No 

No 

40  000 

190 

100 

3.5 

Yes 

Yes 

3  150  000 

6 

75 

No 

Yes 

40  000 

3 

33 

No 

Yes 

25  000 

Jacksonville 

3 

75 

No 

Yes 

16  000 

Joliet.  .    . 

22 

100 

3.8 

Yes 

Yes 

43  800 

Peoria  

5 

94 

3.7 

No 

Yes1 

100  480 

Quincy  

4 

70 

3.5 

No 

No 

39   131 

Rock  Island  .    . 

83 

91 

No 

No 

42  000 

St.  Louis  

38 

98 

3.8 

No« 

Yes5 

821  000 

NOTE — The  information  in  this  table  was  obtained  from  city  health  departments 
Certified   milk  has   not    been   considered   in   this  table.     In  some  markets  between  1  and  2  per- 
cent of  the  total  milk  consumed  is  certified.     sEffective  June  1,  1928.     'Part  of  milk  distributed  in 
Rock  Island  is  pasteurized  in  Davenport  and  Moline.     'Maximum  bacterial  count  allowed  on  milk 
consumed  in  raw  state  is  about  50,000.     5Effective  March  21,  1930. 

municipal  health  inspectors  are  tested  for  numbers  of  bacteria.  The 
maximum  bacterial  count  that  is  allowed  varies  among  the  different 
markets.  The  score  card  is  generally  used  in  grading  milk  plants. 
Furthermore,  in  certain  districts  the  health  departments  specify  the 
type  of  equipment  which  they  regard  as  essential  to  efficient  pasteuri- 
zation and  enforce  its  use. 

Several  cities  in  the  state  have  enacted  ordinances  requiring  that 
all  milk  and  cream  for  fluid  consumption  be  supplied  from  cows  which 
react  negatively  to  the  tuberculin  test.  The  consumption  of  tuber- 
culosis-free milk  is  regarded  as  particularly  important  in  districts 
where  raw  milk  is  consumed. 

Illinois  Model  Milk  Ordinance. — The  Illinois  Department  of  Public 
Health,  with  the  cooperation  of  the  State  Department  of  Agriculture, 
has  drafted  what  may  be  termed  a  model  milk  ordinance,  which  is  now 
available  for  the  consideration  of  interested  parties  and  organizations, 
particularly  health  and  food  departments  of  Illinois  municipalities. 
While  the  ordinance  may  require  some  modifications  to  meet  local  con- 
ditions, it  nevertheless  serves  as  a  guide  for  drafting  municipal  regula- 
tions. Following  is  a  brief  digest  of  the  more  important  provisions 
of  the  ordinance. 

Those  who  engage  in  the  business  of  dispensing  milk  to  the  trade  are  required 
to  secure  a  license  upon  payment  of  a  small  fee.  Administration  of  the  ordinance 
is  under  the  jurisdiction  of  the  municipal  health  department,  which  is  permitted  to 
use  its  own  discretion  when  emergencies  arise  that  are  not  considered  in  the  ordi- 
nance. Quantities  of  regular  milk  of  less  than  gallon  lots  when  sold  to  the  retail 
trade  must  be  sold  in  containers  with  the  net  contents  and  distributor's  name 
thereon.  This  provision  not  only  dispenses  with  the  dipping  of  milk  on  routes, 
which  may  result  in  spreading  of  contagious  diseases,  but  requires  that  each  dealer 


202  BULLETIN  No.  318  [December, 

use  only  his  own  containers.  As  would  be  expected,  adulteration  of  milk  in  any 
manner  whatsoever  is  strictly  forbidden.  It  is  provided  that  milk  which  is  sold 
for  consumption  in  the  raw  state  should  be  derived  from  healthy  cows,  as  de- 
termined by  veterinary  inspection,  and  shall  not  contain  more  than  100,000 
bacteria  per  cubic  centimeter.  Raw  milk,  like  pasteurized,  must  be  labeled  as 
such  on  the  container  or  part  thereof.  Persons  on  farms  and  in  dairies  who  handle 
raw  milk  must  not  only  be  free  from  contagious  diseases,  but  those  who  have 
previously  had  typhoid  or  paratyphoid  fever  must  show  by  medical  examination 
that  they  are  not  carriers  of  these  diseases.  The  requirements  regarding  the  sani- 
tation of  premises,  equipment,  and  containers  undoubtedly  are  conducive  to  a  clean 
and  safe  milk  supply.  The  board  of  health  created  by  this  ordinance  is  empowered 
with  the  right  to  prosecute  any  violations  of  its  provisions. 

Altho  this  model  ordinance  is  probably  better  adapted  to  condi- 
tions in  the  average  size  of  market,  than  in  the  large  market,  it  in- 
cludes many  of  the  fundamental  requirements  for  the  safeguarding 
of  the  milk  supply  of  any  city,  large  or  small. 

Regulations  in  tlie  Chicago  Market. — Following  are  some  of  the 
more  important  activities  in  which  the  Chicago  Health  Department 
has  engaged  for  the  purpose  of  providing  a  wholesome  supply  of  milk 
to  the  city. 

1.  Strict  enforcement  of  pasteurization  of  all  milk. 

2.  Chemical  and  bacteriological  inspection  of  milk  supply. 

3.  Enforcement  of   an  order  requiring  that   all  milk   and  cream  served  in 
restaurants  and  similar  eating  places  be  supplied  in  bottles,  or  other  con- 
tainers, sanctioned  by  the  Health  Department. 

4.  Prohibition  of  hand-capping  of  milk  bottles. 

5.  Enforcement  of  an  order  requiring  that  all  trucks  hauling  milk  from  the 
country  bo  equipped  with  properly  ventilated  and  enclosed  truck  bodies. 

6.  Establishment  of  maximum  temperature  limitations  for  raw  milk  coming 
into  the  city. 

7.  Periodical  surveys  of  milk  and  cream  sold  in  Chicago. 

8.  Engineering  survey  of  pasteurizing  equipment  to  determine  the  extent  of 
defects,  if  any. 

9.  Adoption  of  an  ordinance  requiring  that  all  cattle  supplying  milk  for  the 
Chicago  market  react  negatively  to  the  tuberculin  test. 

10.    Maintenance  of  country  dairy  registration  and  inspection,  including  in- 
spection of  country  milk  plants  and  dairies. 

Following  is  a  copy  of  the  recent  amendment  to  the  Chicago  health 
code  prohibiting  the  sale  of  milk  from  cows  which  develop  a  positive 
reaction  to  the  tuberculin  test: 

"All  milk,  cream,  skim  milk,  or  buttermilk  which  shall  be  delivered  into,  sold, 
offered  for  sale,  or  distributed  for  purposes  of  food,  in  the  City  of  Chicago  shall 
be  from  healthy  cows  free  from  disease.  For  the  purpose  of  determining  the  con- 
dition of  such  cows,  each  and  every  animal  in  the  herds  from  which  milk  shall  be 
obtained  shall  be  certified  by  veterinarians  authorized  by  the  commissioner  of 
health,  and  shall  have  been  examined  within  one  year  of  the  time  when  milk  is 
accepted  therefrom.  The  commissioner  of  health  may  also  consider  certification 
from  otlrer  veterinarians  when  the  herd  is  under  State  or  Federal  supervision  and 
shall  have  been  examined  within  a  like  time.  The  examination  to  be  made  of  such 
animals  shall  be  of  such  a  character  as  to  enable  the  veterinarian  to  determine 
whether  the  animal  is  free  from  contagious  or  infectious  diseases  of  all  kinds  and 
to  certify  thereto.  The  test  may  be  repeated  when  it  is  deemed  advisable  or 


1928}  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  203 

necessary  by  the  commissioner  of  health.  In  case  such  examination  is  under 
Federal  or  State  authority  the  owners  of  the  herds  may  obtain  certificates  or 
blanks  from  the  commissioner  of  health  for  purposes  of  certification  by  such 
Federal  or  State  Veterinarians.  Any  cow  added  to  a  herd  that  has  been  exam- 
ined and  on  which  a  certificate  has  been  issued  shall  be  examined  when  it  is  first 
added  to  the  same.  All  cattle  found  to  be  unhealthy  shall  be  immediately  ex- 
cluded from  the  herd  which  is  certified  as  hereinbefore  provided,  and  any  milk 
therefrom  shall  be  withheld  from  the  market.  Any  diseased  animal  found  in  the 
herd  at  any  time  shall  be  entirely  removed  from  the  premises  wherein  the  certified 
herd  is  kept  within  thirty  days  after  the  discovery  of  such  disease." 

St.  Louis  Regulations. — On  March  21,  1928,  the  city  of  St.  Louis, 
which  secures  approximately  80  percent  of  its  total  milk  supply  from 
Illinois  producers,  approved  a  new  milk  ordinance  requiring  that  after 
March  21,  1930,  which  is  two  years  from  the  date  of  approval,  all  of 
its  milk  supply  must  be  produced  by  cows  free  from  tuberculosis  as 
determined  by  the  tuberculin  test.  Beginning  April  21,  1928,  how- 
ever, the  tuberculin  test  requirement  became  effective  for  cows  that 
produce  fluid  milk  for  consumption  in  the  raw  state.  Practically  all 
other  provisions  became  effective  one  month  from  date  of  approval. 

Altho  pasteurization  is  not  absolutely  compulsory  in  the  St.  Louis 
district,  it  is  practically  so,  since  very  rigid  restrictions  are  placed 
upon  milk  that  is  consumed  in  the  raw  state.  The  maximum  bacterial 
count  allowed  for  such  milk  is  approximately  50,000  bacteria  per  cubic 
centimeter.  Strict  control  is  maintained  upon  the  entire  milk  supply 
from  farm  to  ultimate  consumer.  A  medical  inspection  is  required 
annually  for  every  person  connected  with  a  dairy  or  milk  plant  whose 
work  brings  him  in  contact  svith  the  production,  handling,  storage,  or 
transportation  of  milk  or  milk  products.  Rigid  enforcement  of  the 
above  provisions  and  all  similar  ones  that  are  now  effective  should 
provide  a  safe  milk  supply  of  high  quality  for  this  district. 

Peoria  and  Quincy  Regulations. — Strict  enforcement  of  the  new 
milk  ordinance  of  Peoria  which  became  effective  June  1,  1928,  should 
assure  a  milk  supply  of  high  quality.  The  ordinance  not  only  pro- 
vides that  the  milk  be  produced  and  handled  under  proper  sanitary 
conditions  but  also  that  it  be  supplied  by  cows  that  react  negatively  to 
the  tuberculin  test.  Even  tho  pasteurization  is  not  required  in  Quincy, 
70  percent  of  the  milk  supply  is  pasteurized. 

ASSEMBLING  AND  PROCESSING  PLANTS 

Expansion  of  markets  and  changes  in  the  standard  of  milk  quality 
are  largely  responsible  for  our  present  complex  system  of  distribution 
in  which  many  agencies  and  instrumentalities  arc  employed.  In  some 
of  the  large  markets  of  the  state  the  demand  for  milk  is  now  so  large 
that  the  outer  boundaries  of  production  areas  have  been  extended  a 
hundred  miles  or  more  beyond  the  local  consumption  centers.  In 
such  districts,  country  milk  plants  including  receiving  stations  and 


204 


BULLETIN  No.  318 


[December, 


pasteurizing  plants  have  been  established  by  jobbers  and  dealers  for 
the  purpose  of  facilitating  the  process  of  marketing  (Fig.  8).  Only 
a  small  portion  of  the  milk  supply  of  Illinois  markets  is  pasteurized  in 
the  country,  by  far  the  greater  majority  of  the  pasteurizing  plants 
being  located  in  cities. 

Country  Milk  Plants 

Chicago  District. — Eighty-five  of  the  242  plants  which  receive  milk 
outside  of  Chicago  for  consumption  in  this  market  operate  pasteur- 
izers (Table  10).  Altho  Illinois  supplies  a  large  amount  of  the  fluid 
milk  consumed  in  Chicago,  there  are  fewer  country  pasteurizers  and 
receiving  stations  in  this  state  relatively  than  in  Wisconsin.  A  large 
portion  of  the  Illinois  area  that  regularly  produces  for  the  fluid-milk 
market  is  close  enough  to  Chicago  so  that  milk  is  trucked  directly  to 

TABLE  10. — NUMBER  AND  LOCATION  OF  COUNTRY  PLANTS  HANDLING  MILK  AND 

CREAM  UNDER  SUPERVISION  OF  CHICAGO  HEALTH  DEPARTMENT1, 

JANUARY  1,  1928 


State 

Pasteurizers 

Receiving  stations 

Number 

Percentage 
of  total 

Number 

Percentage 
of  total 

Illinois  

15 
.58 
6 
4 
1 
1 

85 

17.6 

68.2 
7.1 
4.7 
1.2 
1.2 

100.0 

31 
108 
14 
4 

19.8 
68.8 
8.9 
2.5 

Wisconsin       

Indiana 

Michigan 

Iowa  .  . 

Ohio  

Total  

157 

100.0 

'The  number  of  country  plants  in  operation  varies  during  the  year,  many  more 
operating  in  the  summer  than  in  the  winter. 

city.  All  these  country  plants,  regardless  of  their  location,  are 
required  to  comply  with  Chicago  Health  Department  regulations. 
Only  a  part  of  these  pasteurizers  are  bottling  plants.  The  practice 
of  bottling  milk  in  the  country  is  not  engaged  in  so  extensively  as 
formerly.  It  increases  transportation  costs,  as  case  shipments  are 
much  more  costly  than  those  by  way  of  can  or  tank.  Cooling  expenses, 
chiefly  for  ice  and  refrigeration,  are  materially  increased.  Plant  over- 
head costs  are  usually  greater  than  they  would  be  if  this  milk  were 
bottled  in  connection  with  that  bottled  in  the  city.  The  disadvantages 
of  such  a  practice  apparently  greatly  outweigh  the  advantages,  espe- 
cially since  consumers  have  appeared  to  be  rather  indifferent  to  the 
slogan  ' '  bottled  in  the  country. ' ' 

St.  Louis  District. — About  68  percent  of  the  total  St.  Louis  supply 
is  handled  thru  country  milk-receiving  stations,  of  which  there  are 


1918] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


205 


FIG.  8. — MILK  PLANTS  IN  ILLINOIS  AND  NEIGHBORING  STATES,  JANUARY  1,  1928 

In  the  territory  outside  of  Illinois  only  those  country  receiving  and  processing 
plants  that  supply  the  Chicago  and  St.  Louis  markets  are  shown.  Many  of  the 
plants  handling  milk  for  fluid  consumption  in  Chicago  are  more  than  200  miles 
from  the  city.  Forty-nine  of  the  53  stations  receiving  milk  for  St.  Louis  are  lo- 
cated in  Illinois, 


206 


BULLETIN  No.  318 


[December, 


fifty-three.  Forty-nine  of  these  are  located  in  Illinois.  Three  of  the 
forty-nine  pasteurize  and  bottle  milk.  A  great  majority  of  these  sta- 
tions receive  less  than  a  thousand  gallons  of  milk  daily  (Table  11). 
About  two-thirds  of  the  milk  supply  is  handled  by  stations  having 

TABLE  11. — NUMBER  AND  CAPACITY  OF  COUNTRY  RECEIVING  STATIONS  HANDLING 
MILK  AND  CREAM  IN  ST.  Louis  DAIRY  DISTRICT',  JANUARY  1,  1928 


Gallons  received 
per  day 

Number  of  re- 
ceiving stations 

Percentage  of  re- 
ceiving stations 
in  each  group 

Percentage  of 
total  milk 
received 

Accumulative 
percentage  of 
milk  received 

1-    300.  .  . 

5 

9.43 

1.67 

1.67 

300-    500.  .  .  . 

11 

20.76 

8.05 

9.72 

500-    800.  .  .  . 

15 

28.30 

15.83 

25.55 

800-1,000.... 

5 

9.43 

7.84 

33.39 

1,000-2,000. 

12 

22.64 

29.01 

62.40 

2,000-5,000  

4 

7.55 

19.61 

82.01 

5,000  and  over.  . 
Total  

1 

53 

1.89 
100.00 

17.99 
100.00 

100.00 

of  these  receiving  stations  also  operate  pasteurizers  and  bottling  plants. 


a  daily  capacity  of  more  than  a  thousand  gallons.  Besides  the  four 
milk-receiving  stations  in  Missouri,  there  are  also  two  other  stations 
which  handle  sweet  cream  only. 

Peoria  and  Quincy  Districts.  —  The  nearness  of  production  areas  to 
the  Peoria  and  Quincy  markets  renders  it  unnecessary  to  operate  coun- 
try receiving  stations.  The  milk  supply  of  these  two  cities  is  hauled 
directly  from  farm  to  the  city  plants  of  dealers. 

City  Pasteurizing  Plants 

Illinois  consumers  are  becoming  more  particular  about  milk  quality. 
They  no  longer  tolerate  the  dipping  of  milk  and  usually  require  that 
it  be  pasteurized.  As  a  result,  pasteurizing  and  bottling  plants  have 
become  an  essential  part  of  the  machinery  of  distribution. 

Chicago.  —  The  milk  dealers  of  Chicago,  of  whom  there  are  196, 
were  operating  190  pasteurizing  plants  within  the  city  on  January  1, 
1928.  A  majority  of  these  are  located  on  the  south  side  (Fig.  9). 
Eleven  of  the  pasteurizing  plants  handle  more  than  50  percent  of  all 
the  fluid  milk  consumed  (Table  12).  About  25  percent  of  the  dealers 
pasteurize  between  100  and  200  gallons  daily.  The  number  of  small 
dealers  in  the  Chicago  market,  however,  has  been  decreasing  within 
the  past  few  years.  Mergers  among  them  have  been  rather  frequent, 
especially  since  the  enforcement  of  regulatory  measures  in  milk 
processing  and  the  action  of  other  factors  increasing  the  costs  of  dis- 
tribution. Under  present  conditions  it  is  rather  difficult  for  dealers 


1988] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


207 


FIG.    9.  —  FLUID-MILK    PASTEURIZING    PLANTS    AND    ICE-CREAM 

FACTORIES  IN  CHICAGO,  JANUARY  1,  1928 

Very  few  pasteurizers  in  the  city  handle  more  than  15,000  gal- 
lons of  milk  daily.  Most  of  the  ice-cream  factories  are  located 
near  the  center  of  the  city,  where  consumption  is  greatest  and 
where  railroad  terminals  are  convenient. 

in  this  market  to  maintain  their  business  unless  their  volume  of  trade 
is  large  enough  to  make  possible  low  overhead  costs. 


208 


BULLETIN  No.  318 


[December, 


TABLE  12. — NUMBER  AND  CAPACITY  OF  PLANTS  IN  CITY  OF  CHICAGO  WHICH  PAS- 
TEURIZE MILK  FOR  FLUID  CONSUMPTION,  JANUARY  1,  1928 


Gallons  pasteur- 
ized per  day 

Number  of 
pasteurizers 

Percentage  of 
pasteurizers 
in  each  group 

Percentage  of 
total  milk 
pasteurized 

Accumulative 
percentage  of 
milk  pasteur- 
ized 

1-       100  .  . 

26 

13.69 

.60 

.60 

100-      200  .  . 

48 

25.26 

2.22 

2.82 

200-      300  .  . 

21 

11.05 

1.62 

4.44 

300-      500  .  . 

19 

10.00 

2.26 

6.70 

500-  1,000  .. 

22 

11.58 

4.91 

11.61 

1,000-  5,000  .. 

43 

22.63 

28.79 

40.40 

5,000-15,000  .. 

6 

3.16 

15.54 

55.94 

15,000-and  over. 

5 

2.63 

44.06 

100.00 

Total  

190 

100.00 

100.00 

St.  Louis. — There  are  thirty-eight  plants  operating  in  St.  Louis  and 
two  plants  in  East  St.  Louis  which  pasteurize  milk  for  fluid  con- 
sumption (Fig.  10).  Two  large  pasteurizers  at  Highland,  Illinois, 


•  Fluid  Mil*  Posrevrizars 


FIG.  10. — PLANTS  PASTEURIZING  MILK  FOR  FLUID  CONSUMPTION  IN  ST.  Louis 

AND  EAST  ST.  Louis,  JANUARY  1,  1928 

More  than  75  percent  of  the  pasteurized  milk  consumed  in  East  St.  Louis 
is  handled  by  plants  in  St.  Louis  and  in  Highland,  Illinois. 


1928] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


209 


and  a  smaller  one  at  Waterloo  supplement  the  milk  supply  of  these 
plants.  Their  entire  output,  however,  is  not  consumed  within  the 
city  itself;  a  small  portion  is  used  to  supply  the  suburban  trade. 
East  St.  Louis,  with  approximately  80,000  inhabitants,  depends  chiefly 
upon  the  plants  of  St.  Louis  for  its  pasteurized  milk.  The  relative 
amounts  of  milk  handled  by  the  pasteurizers  are  indicated  in  Table  13. 

TABLE  13. — NUMBER  AND  CAPACITY  OF  PLANTS  IN  ST.  Louis  DAIRY  DISTRICT 
WHICH  PASTEURIZE  MILK  FOR  FLUID  CONSUMPTION,  JANUARY  1,  19281 


Gallons  pasteur- 
ized per  day 

Number  of 
pasteurizers 

Percentage  of 
pasteurizers 
in  each  group 

Percentage  of 
total  milk 
pasteurized 

Accumulative 
percentage  of 
milk  pasteur- 
ized 

1-       100  .  . 

7 

16.28 

.59 

.59 

100-      200  .  . 

11 

25.59 

1.74 

2.33 

200-      300  .  . 

5 

11.63 

1.52 

3.85 

300-      500  .  . 

2 

4.65 

.75 

4.60 

500-  1,000  .. 

8 

18.60 

6.16 

10.76 

1,000-10,000  .. 

8 

18.60 

31.22 

41.98 

10  ,000  and  over 

2 

4.65 

58.02 

100.00 

Total  

43 

100.00 

100.00 

'Thirty-eight  of  the  pasteurizers  are  located  in  the  city  of  St.  Louis,  two  in  East 
St.  Louis,  two  in  Highland,  111.,  and  one  in  Waterloo,  111. 

A  small  portion  of  the  milk  consumed  in  St.  Louis  and  suburbs  is 
not  pasteurized.  There  are  eighteen  milk  peddlers  in  St.  Louis  and 
fourteen  in  East  St.  Louis  who  do  not  operate  pasteurizers  but  either 
purchase  milk  from  dealers  or  produce  it  in  city  dairies.  The  milk 
output  of  the  producer  dairies  in  the  two  cities  is  consumed  chiefly  in 
the  raw  state.  As  has  been  previously  stated,  this  source  of  supply  is 
only  a  very  small  part  of  the  total  consumption. 

Peoria  and  Quincy. — There  are  five  pasteurizers  operating  in 
Peoria  and  four  in  Quincy  (Table  9).  Peoria  consumes  about  94  per- 
cent of  its  milk  in  the  pasteurized  state,  Quincy  about  70  percent. 


STATISTICS  OF  CONSUMPTION 

Differences  in  food  habits  is  one  of  the  most  important  factors 
affecting  the  rate  of  milk  consumption  in  the  different  markets.  Thus 
the  preponderance  of  a  certain  nationality  in  a  particular  district  may 
be  the  determining  factor  in  the  amount  of  milk  consumed.  Some 
nationalities  prefer  a  large  amount  of  milk  in  the  diet  for  both  adults 
and  children,  while  others  restrict  its  consumption  largely  to  children. 
Generally  speaking,  however,  the  American  people,  regardless  of  the 


210 


BULLETIN  No.  318 


[December, 


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19S8]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  211 

native  food  habits  of  the  country  from  which  they  or  their  ancestors 
emigrated,  are  recognizing  more  and  more  the  value  of  milk  in  the 
diet,  and  milk  is  taking  its  place  as  an  essential  family  food. 

Per  Capita  Consumption  in  Three  Markets 

The  per  capita  consumption  of  milk  in  the  country  as  a  whole  has 
been  gradually  increasing.  According  to  Yearbooks  of  the  U.  S.  De- 
partment of  Agriculture,  in  the  ten-year  period  from  1917  to  1926 
the  per  capita  consumption  of  milk  for  household  purposes  increased 
31  percent.  Per  capita  consumption  in  cities  is  less  than  on  farms. 
During  1924  the  average  for  all  cities  was  35  percent  less  than  the 
average  in  rural  communities  according  to  the  same  source. 

In  Table  14  is  given  the  estimated  per  capita  consumption  of 
Chicago,  St.  Louis,  and  Peoria,  based  on  data  gathered  in  the  present 
study.  Since  the  butterfat  content  of  the  milk  distributed  in  these 
markets  varied  somewhat,  all  estimates  have  been  converted  to  the 
common  basis  of  milk  containing  3.5  percent  of  butterfat.  Calcula- 
tions were  made  on  the  basis  of  the  prevailing  milk  tests  shown  in 
Table  9,  it  being  practically  impossible  to  arrive  at  an  exact  average 
butterfat  test  for  all  the  milk  distributed  in  each  market. 

Except  in  the  Peoria  district,  these  refer  to  sales  of  fluid  milk  alone. 
The  Peoria  estimate  refers  to  both  milk  and  cream  because  a  separate 
record  of  the  amounts  used  for  each  product  was  not  available. 

The  total  daily  sales  of  all  dealers  was  used  as  a  basis  in  calcu- 
lating the  total  amount  of  milk  consumed  in  each  district.  City  deal- 
ers did  not  always  handle  all  the  milk  for  the  city  trade ;  jobbers  and 
others  outside  of  the  city  supplied  a  relatively  small  amount  direct  to 
hotels,  restaurants,  and  other  similar  places.  It  was  estimated,  how- 
ever, that  dealer 's  sales  represented  95  percent  of  the  total  consumption 
in  Chicago,  98  percent  in  St.  Louis,  and  90  percent  in  Peoria.  Total 
consumption  figures  were  therefore  divided  by  the  population  served 
on  January  1,  1928,  to  obtain  the  per  capita  consumption. 

Altho  the  price  of  milk  was  highest  in  the  Chicago  market,  more 
was  consumed  per  capita  in  that  market  than  in  either  of  the  other 
two  markets.  Chicago  consumed  .801  pint  of  milk  per  capita,  St. 
Louis  .666  pint,  and  Peoria  .681  pint  of  milk  and  cream  combined. 
The  per  capita  consumption  of  both  milk  and  cream  in  Peoria  was 
even  less  than  that  of  milk  alone  in  Chicago.  These  facts  indicate 
that  the  possibilities  of  increasing  the  rate  of  milk  consumption  in  the 
cities  of  Peoria  and  St.  Louis  are  rather  promising,  especially  since 
raw  product  and  distribution  costs  are  low  enough  to  enable  dealers 
in  these  two  markets  to  sell  milk  cheaper  than  in  Chicago.  The  high 


212  BULLETIN  No.  318  [December, 

rate  of  milk  consumption  in  Chicago  is  indicative  of  the  effect  which 
public  confidence  in  milk  quality  has  upon  market  demand.  When 
we  consider  that  no  serious  epidemic  has  been  traced  to  the  milk  sup- 
ply in  this  territory  within  recent  years,  it  appears  evident  that  this 
confidence  has  been  well  founded.  Altho  improvements  in  quality 
necessitate  increased  costs  which  must  be  met  by  higher  prices  to  the 
consumer,  the  fact  that  higher  quality  has  led  to  a  higher  per  capita 
consumption  would  seem  to  indicate  that  the  improvements  have  been 
in  compliance  with  consumer  demand. 

Trend  in  Chicago  Sales 

Some  general  idea  regarding  the  increase  in  milk  and  cream  con- 
sumption in  Chicago  for  the  five-year  period  from  1922  to  1926  may  be 
obtained  by  referring  to  Table  15. a  These  calculations  are  based 

TABLE  15. — TREND  IN  MILK  AND  CREAM  SALES  IN  CHICAGO,  1922-1926 
(Average  daily  sales  per  year  for  five-year  period  used  as  base1) 


Percentage 
increase 
per  year 

Milk 
Quarts,  retail  

5.0 

Quarts,  wholesale  

1.7 

Pints,  retail  

10.2 

Pints,  wholesale  

6.5 

Cream 
22-percent,  half-pints,  retail  

7.1 

32-percent,  half-pints,  retail  

5.6 

upon  approximately  30  percent  of  total  distribution. 

upon  slightly  less  than  one-third  of  the  total  distribution.  Had  total 
district  sales  for  the  five-year  period  been  available,  the  effect  of  in- 
creases and  decreases  in  volume  of  business  of  individual  dealers  would 
not  have  influenced  results  as  it  has  probably  done  with  the  data  in 
the  table.  Nevertheless,  when  the  general  improvement  in  milk  qual- 
ity that  has  occurred  within  the  past  five  years  in  this  market  is  con- 
sidered, it  would  seem  that  a  substantial  increase  in  milk  and  cream 
sales  should  have  been  the  logical  result,  especially  since  consumer  milk 
prices  have  remained  practically  unchanged  for  the  period. 

Retail  sales  of  milk  show  greater  increases  than  wholesale  sales  of 
the  same  units.     Retail  quarts  during  this  five-year  period  increased 


1  For  trend  in  sales  of  milk  and  cream  previous  to  the  date  of  this  survey, 
see  Bulletin  269  of  this  Station,  "The  Marketing  of  Milk  in  the  Chicago  Dairy 
District,"  (1925),  by  H.  A.  Boss. 


1928}  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  213 

an  average  of  5  percent  each  year,  while  wholesale  quarts  increased 
only  1.7  percent.  It  is  probable  that  this  difference  is  due  principally 
to  an  improvement  in  retail  service  and  to  an  increase  in  the  use  of 
household  refrigeration,  thereby  making  it  possible  for  milk  to  be  kept 
in  the  home  thru  an  entire  day  without  much  appreciable  change  in 
quality.  The  fact  that  milk  is  becoming  more  popular  as  a  family 
food  may  partly  account  for  the  larger  increase  in  pint  sales.  For- 
merly it  was  not  unusual  for  families  without  children  to  take  a  pint 
of  milk  at  irregular  intervals,  but  since  milk  is  now  more  generally  re- 
garded as  being  essential  to  health,  it  is  probable  that  these  families 
have  begun  to  consume  milk  more  regularly. 

Half -pint  sales  of  22-percent  and  32-percent  cream  increased  by  7.1 
percent  and  5.6  percent  per  year,  respectively. 

In  studying  a  series  of  economic  data,  it  is  customary  to  determine 
first  the  tendency  of  the  series  to  rise  or  fall  with  the  lapse  of  time 
and,  second,  to  determine  seasonal  variations  in  the  series.  Both  of 
these  phenomena  may  be  measured  rather  accurately.  In  Fig.  11  the 
results  of  such  a  study  of  the  milk  sales  in  the  Chicago  market  are  pre- 
sented. The  trend  line  shows  the  general  tendency  of  sales  to  increase 
during  the  time  indicated  (1922  to  1926).  The  line  of  "normal"  dis- 
tribution represents  what  the  sales  would  have  been  during  any  par- 
ticular month  if  no  other  influence  than  the  tendency  for  the  sales  to 
increase  and  the  usual  seasonal  variations  had  operated. 

In  Fig.  12  the  deviations  of  the  actual  sales  from  the  normal  line 
shown  in  Fig.  11  are  expressed  in  percentages.  These  deviations,  it 
will  be  noted,  are  extremely  small  in  the  case  of  quarts  of  milk  and 
half-pints  of  22-percent  cream  sold  at  retail  and  rather  large  in  the 
case  of  the  other  volumes.  Apparently  the  rate  of  employment,  an 
index  of  which  is  included  in  Fig.  12,  has  considerable  bearing  upon 
the  consumption  of  the  more  popular  milk  and  cream  units.  With 
certain  units  the  relationship  was  direct,  while  with  others  it  was 
inverse.  Sales  of  quarts  of  milk,  both  wholesale  and  retail,  and  half- 
pints  of  22-percent  cream  rose  and  fell  with  the  rise  and  fall  of  the 
index  of  employment.  The  sale  of  pints  of  milk  was  somewhat  in- 
versely related  to  the  rate  of  employment.  Consumers  apparently 
regulate  the  amount  of  milk  purchased  so  as  to  harmonize  with  their 
income,  and  as  a  period  of  business  depression  begins  many  consumers 
shift  their  milk  purchases  from  quarts  to  pints.  The  rate  of  milk 
consumption  apparently  is  highly  sensitive  to  fluctuations  in  economic 
activity,  and  increases  and  decreases  in  somewhat  close  correspondence 
with  periods  of  prosperity  and  depression. 

The  abrupt  decline  in  the  sale  of  pints  of  milk  which  began  on 
December  1,  1922,  was  the  result  of  a  one-cent  increase  in  price.  The 
effect  of  price  changes  on  other  units  was  much  less  pronounced. 


214 


BULLETIN  No.  318 


[December, 


FIG.  11. — MONTHLY  VARIATION  IN  THE  CONSUMPTION  OF  MILK  AND 

CREAM  IN  THE  CHICAGO  MARKET  FROM  1922  TO  1926 
The  effect  of  season  and  other  factors  on  the  consumption  of 
certain  units  of  milk  and  cream  is  readily  apparent  from  the 
curve  showing  actual  distribution.  The  line  of  "normal"  distribu- 
tion indicates  what  the  sales  would  have  been  during  any  particu- 
lar month  if  no  other  influence  than  the  tendency  toward  increasing 
consumption  (trend)  and  the  usual  seasonal  variations  had  op- 
erated. (All  units  are  reduced  to  a  pound  basis  for  the  sake  of 
greater  comparability. ) 

Seasonal  Variation  in  Milk  and  Cream  Sales 

Seasonal  factors  exert  considerable  influence  on  milk  and  cream 
sales.  In  Table  16  and  Fig.  13  are  shown  certain  data  for  the  Chi- 
cago market.  Altho  not  all  units  in  which  milk  and  cream  are  sold 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


215 


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FIG.  12. — COMPARISON  OF  MILK  AND  CREAM  CONSUMPTION  IN  THE  CHICAGO 
MARKET,  1922-1926,  WITH  INDEX  OF  EMPLOYMENT  IN  ILLINOIS 

The  "normal"  distribution  curve  in  Fig.  11  is  here  shown  as  the  base  line 
in  each  case.  The  percentage  de\7iation  from  this  normal  is  shown  by  the  curve. 
With  the  exception  of  half -pints  of  32-percent  cream,  the  curve  showing  consump- 
tion follows  in  a  general  way  the  curve  of  employment.  The  abrupt  decline  in 
pints  of  milk  in  December,  1922,  was  caused  by  a  one-cent  raise  in  price. 


216 


BULLETIN  No.  318 


IM    •* 

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1928] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


217 


are  included,  it  is  believed  the  data  are  representative  of  the  market 
since  the  units  that  are  included  are  the  most  popular  ones,  by  far  the 
greater  portion  of  the  total  distribution  being  made  in  this  way. 

Ketail  quart  sales  of  milk,  which  constitute  a  large  part  of  all  sales, 
were  highest  in  March    (102.6  percent  of  average)    and  lowest  in 


fterceni 


Retail  Milk  Quarts 

Wholesale  Milk  Quarts 

Retail  Milk  Pints 

Wholesale  Milk  Pints 

Retail  2Z%  cream- £  Pints . 

Retail  J2  %  cream  -  £  Pints 


fiercer! 


130 
I  tO 


FIG.  13. — SEASONAL  VARIATION  IN  CONSUMPTION  OF  MILK  AND 

CREAM  IN  THE  CHICAGO  MARKET  FROM  1922  TO  1926 
Sales  of  milk  pints  to  the  wholesale  trade  were  higher  in 
summer  than  were  any  of  the  other  units  shown  in  this  graph, 
while  retail  half-pint  sales  of  32-percent  cream  were  lowest. 
The  units  here  shown  were  the  most  popular  ones  with  the 
trade  and  represent  the  greater  part  of  total  sales.  The  average 
monthly  distribution  for  the  five-year  period  was  used  as  the 
base  for  calculating  the  percentage  variations.  See  Table  16. 
Trend  removed. 


August  (92.3  percent  of  average) .  With  the  exception  of  retail  quarts. 
milk  sales  are  at  a  maximum  during  the  summer  months,  while  cream 
sales  are  lowest  at  that  time.  Wholesale  quart  sales  of  milk  were  ap- 
proximately 8  percent  above  average  during  summer  months  and  retail 
half-pint  sales  of  22-percent  cream  were  approximately  9  percent 
below.  Retail  quart  sales  would  normally  be  expected  to  decline  dur- 


218  BULLETIN  No.  318  [December, 

ing  the  summer,  since  many  families  leave  the  city  on  vacations  when 
the  schools  close.  Furthermore,  sufficient  ice  is  not  always  available 
in  every  household  to  keep  milk  in  satisfactory  condition  thruout  the 
day,  and  hence  many  housewives  depend  upon  the  neighborhood  store 
for  their  milk  supply.  This  accounts  also  for  the  increases  in  whole- 
sale distribution  of  quarts  and  pints  during  this  period.  In  addition, 
workers  in  various  lines  of  employment,  especially  in  the  building 
trades,  generally  buy  a  pint  of  milk  for  lunch  each  day  in  summer  in 
preference  to  carrying  coffee  from  home. 

Half-pint  cream  sales  show  a  very  noticeable  decline  in  summer. 
People  ordinarily  prefer  cold  drinks  during  hot  weather  and  thus  con- 
sume less  coffee  cream.  Sales  of  32-percent  whipping  cream  declined 
much  more  than  those  of  22-percent  cream,  possibly  because  rich  food 
does  not  appeal  to  people  so  much  in  the  summer  season,  and  the 
housewife  ordinarily  does  not  do  a  great  deal  of  cooking  or  making 
of  fancy  dishes  \vhich  require  whipped  cream.  Moreover,  when  the 
weather  is  hot  it  is  more  difficult  to  maintain  the  temperature  of  cream 
at  a  point  at  which  it  will  whip  readily.  Still  another  factor  in  the 
marked  decline  in  the  consumption  of  this  type  of  cream  is  its  use 
principally  by  those  having  a  comfortable  income  and  who,  therefore, 
are  likely  to  take  vacations  away  from  the  city,  thus  reducing  the 
demand  for  this  product. 

The  total  consumption  of  milk  in  each  of  the  four  Illinois  markets 
studied  varied  but  little  thru  the  year  (Table  17  and  Fig.  14).  With 
the  exception  of  St.  Louis,  minimum  consumption  occurred  during  the 
months  of  July  and  August,  ranging  in  the  different  markets  from 
93.2  percent  to  97.3  percent  of  average  sales  for  the  year,  while  maxi- 
mum consumption  varied  with  the  particular  district.  Milk  sales  in 
St.  Louis  were  lowest  in  December. 

Third-quarts  of  milk  are  not  included  and  the  cream  data  represent 
only  half-pint  sales  of  22-  and  32-percent  cream.  However,  since  the 
half-pint  sales  unit  and  these  two  types  of  cream  are  most  popular  with 
the  trade,  data  for  them  should  furnish  a  satisfactory  index  of  total 
cream  consumption. 

Cream  sales  in  the  four  markets,  altho  rather  regular,  did  not  dis- 
play quite  the  same  degree  of  uniformity  as  milk.  Without  exception, 
the  period  of  lowest  consumption  occurred  during  the  month  of  August 
and  ranged  for  the  different  months  between  78.4  and  93.6  percent  of 
average  sales.  The  principal  factors  responsible  for  this  seasonal 
decline  have  been  discussed  above. 

For  additional  information  relative  to  seasonal  variation  in  distri- 
bution of  various  units  and  types  of  dairy  products  see  Tables  41,  42, 
and  43  in  the  Appendix. 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


219 


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220 


BULLETIN  No.  318 


[December, 


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FIQ.  14. — SEASONAL  VARIATIONS  IN  MILK  AND  CREAM  SALES 

IN  FOUR  MARKETS 

Milk  sales  were  fairly  uniform  thruout  the  year  in  all  four 
markets,  while  cream  sales  showed  considerable  decrease  during 
the  summer  months.  All  units  of  measure  are  included  in  the 
"regular"  milk  sales  except  third-quarts.  Cream  sales  are 
based  on  cream  containing  22  and  32  percent  butterfat.  See 
Table  17  for  base  distribution  and  time  intervals.  Trend 
removed. 

Daily  Variation  in  Sales 

Scarcely  less  important  than  seasonal  variations  are  daily  irregu- 
larities. The  demand  for  certain  units  of  milk  and  milk  products 
varies  greatly  on  different  days  of  the  week.  Whipping  cream  is  an 
outstanding  example  of  this,  the  Sunday  sales  often  being  greater 
than  those  of  any  three  or  more  other  days. 

The  daily  variation  in  the  different  sales  units  of  milk,  cream,  and 
miscellaneous  milk  products  in  the  four  large  markets — Chicago,  St. 
Louis,  Peoria,  and  Quincy — is  shown  in  Tables  18,  19,  and  20.  The 
distribution  of  certified  milk  was  rather  uniform  (Table  18).  Since 
most  of  this  product  is  consumed  by  children,  there  is  no  apparent 
reason  why  large  irregularities  in  its  distribution  should  occur. 


1988] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


221 


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224  BULLETIN  No.  318  [December, 

With  the  exception  of  pints  and  half-pints,  the  various  sales  units 
of  regular  milk  showed  a  fairly  uniform  distribution  thruout  the  week 
in  all  districts.  Maximum  and  minimum  quart  sales  of  regular  milk, 
when  expressed  in  percentages  of  the  daily  average  of  each  market, 
were :  Chicago,  Monday  117.6  percent,  Saturday  96.1  percent ;  St. 
Louis,  Saturday  107.9  percent,  Sunday  87.5  percent ;  Peoria,  Saturday 
103.5  percent,  Tuesday  98  percent:  Quincy,  Tuesday  107.9  percent, 
Sunday  87.8  percent.  Workers  who  make  a  practice  of  carrying 
lunches  purchase  much  milk  daily  in  pints.  Consequently  on  Sun- 
days, when  they  are  not  working,  the  sale  of  pints  drops.  Restaurants 
are  large  purchasers  of  milk  and  serve  it  chiefly  in  half-pint  bottles. 
Hence  on  Saturdays  and  Sundays,  when  the  trade  of  restaurants  falls 
off,  a  drop  in  half-pint  sales  results.  Saturday  sales  in  Peoria  differ 
from  those  in  the  larger  markets,  possibly  because  a  relatively  larger 
percentage  of  the  workers  who  eat  at  restaurants  work  a  full  day  on 
Saturday  instead  of  just  a  half-day  as  they  do  in  the  other  cities ;  thus 
in  Peoria  workers  contribute  to  restaurant  patronage  on  Saturday 
noon  as  well  as  on  the  other  days  of  the  wTeek. 

With  the  exception  of  Quincy,  sales  of  22-percent  cream  were 
greater  on  Sunday  than  on  any  other  day  of  the  week  (Table  19). 
Sunday  sales  of  22-percent  cream  in  these  markets  exclusive  of  Quincy, 
ranged  between  107.9  percent  and  132.6  percent  of  average  sales.  The 
greater  amount  of  coffee  used  on  this  day,  plus  the  larger  amount  of 
cream  used  for  dessert,  undoubtedly  enhances  cream  sales. 

Sunday  sales  of  32-percent  cream  were  by  far  the  largest  of  any  day. 
They  were  about  2.3  times  as  large  as  average  daily  sales  in  Chicago 
and  St.  Louis  and  approximately  3.7  times  average  daily  sales  in  Peoria. 
This  would  normally  be  expected,  since  Sunday  dinners  are  more  likely 
to  include  salads  and  desserts  wrhich  contain  whipped  cream  than  are 
meals  of  other  days  of  the  week.  Saturday  sales,  even  tho  much  smaller 
than  those  of  Sunday,  were  above  the  average  of  the  five  previous  days. 

Less  cocoa  and  cultured  milk  were  consumed  on  Sundays  in  the 
Chicago  and  Peoria  markets  than  on  any  other  day  (Table  20).  Ex- 
cepting Saturday  sales  of  cocoa  drinks,  sales  of  cultured  milk  and 
cocoa  drinks  were  fairly  uniform  thruout  the  week  in  the  markets 
listed  in  the  table.  The  fact  that  these  drinks  are  not  generally  served 
in  connection  with  Sunday  meals  should  account  for  the  decreases  in 
Sunday  sales.  Another  factor  which  would  probably  cause  Sunday 
sales  of  these  products  to  be  lower  than  sales  on  week  days  is  that  they 
are  often  bought  on  week  days  by  the  working  class  to  supplement  the 
lunch  which  they  bring  from  home. 

Much  more  cottage  cheese  was  sold  on  Friday  than  on  any  other 
day.  much  of  it  replacing  meat  then.  Exclusive  of  Saturday,  when 
supplies  are  purchased  for  Sunday,  butter  sales  were  fairly  uniform. 


1988]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  225 

Demand  for  Different  Sales  Units 

Thus  far  the  discussion  has  been  confined  to  certain  factors  that 
affect  the  rate  of  consumption,  and  nothing  has  been  said  regarding 
the  ratio  of  sales  among  the  various  units.  Consideration  of  this  re- 
lationship is  essential  to  a  proper  understanding  of  costs  and  margins, 
since  profits  vary  among  the  various  units.  The  ratio  of  the  sales  of 
pints  to  quarts,  for  example,  is  an  important  factor  affecting  dealer's 
profits,  since  pints  are  generally  sold  at  a  loss  and  quarts  at  a  profit,  as 
explained  on  pages  260  and  261. 

Altho  data  were  not  obtained  for  exactly  the  same  periods  in  the 
different  markets,  the  periods  and  data  that  follow  are  sufficiently 
comparable  to  bring  out  the  difference  among  the  markets. 

Quarts  Most  Popular  Unit  for  Milk. — The  most  popular  unit  of 
measure  in  wholesale  and  retail  sales  of  regular  and  cultured  milk  is 
the  quart  (Table  21).  Retail  quart  sales  in  the  Chicago,  St.  Louis,  and 
Peoria  markets  were  approximately  85  percent  of  the  total  retail  sales 
of  regular  milk.  Wholesale  quart  sales  varied  from  45  percent  to  67 
percent  of  the  total.  A  quart  bottle  is  not  so  large  but  that  it  can 
be  conveniently  handled.  Hence  a  family  that  uses  three-fourths  of 
a  gallon  of  milk  daily  is  supplied  in  three  quart  bottles  instead  of  in  a 
single  container.  A  pint  of  milk  daily,  whether  regular  or  cultured, 
is  usually  an  insufficient  amount  for  the  requirements  of  the  average 
family  and  furthermore,  milk  when  purchased  in  pint  volumes  is 
generally  more  expensive  than  when  purchased  as  quarts,  a  pint 
usually  selling  for  more  than  one-half  the  quart  price.  These  and 
other  factors  account  for  the  fact  that  approximately  six  times  as 
much  retail  milk  and  three  times  as  much  wholesale  milk  is  sold  in 
quarts  as  in  pints.  With  respect  to  cultured  milk  containing  no  butter- 
fat,  another  probable  cause  for  quarts  being  so  much  more  popular 
than  other  units  of  measure  is  that  the  quart  price — usually  ten  cents 
— is  generally  considered  reasonable. 

With  the  exception  of  St.  Louis,  both  wholesale  and  retail  pint 
sales  made  up  approximately  14  percent  of  all  regular  milk  sold. 

Third-quarts  are  now  served  to  the  trade  in  some  eating  establish- 
ments in  preference  to  half-pints.  The  wholesale  price  of  thirds  of 
regular  and  cultured  milk  is  generally  low  enough  so  that  the  pro- 
prietor of  a  restaurant  or  other  similiar  establishment  may  serve  this 
amount  of  milk  at  ten  cents  and  still  make  a  profit. 

As  one  might  expect,  a  large  amount  of  bulk  milk  was  sold  to  the 
wholesale  trade.  Milk  ordinarily  is  cheaper  when  purchased  in  this 
form  and  for  some  purposes  it  is  even  more  convenient  for  the  pur- 
chaser to  have  it  in  bulk.  The  greater  portion  of  bulk  milk  is  used 
in  manufacturing  and  cooking. 


226 


BULLETIN  No.  318 


[December, 


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19S8]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  227 

Cream  Sold  Mostly  in  Half-Pints. — Regardless  of  the  butterfat 
test  within  the  20  to  40  percent  range,  the  half-pint  is  the  most  popular 
unit  in  which  cream  is  distributed  to  the  retail  trade  (Table  22). 
In  Chicago  half -pint  retail  sales  of  22-percent  cream  were  88.77  per- 
cent of  the  total  retail  cream  sales ;  in  St.  Louis  they  were  44.78  per- 
cent, and  in  Peoria,  67.33  percent.  Half-pint  wholesale  sales  of  22- 
percent  cream  varied  from  approximately  one-fourth  to  one-third  of 
total  wholesale  cream  sales.  A  half-pint  of  cream  generally  is  sufficient 
to  supply  the  demand  of  the  average  household.  Quarter-pints  are 
much  in  demand  in  St.  Louis.  Many  households  now  serve  coffee 
only  for  breakfast,  and  a  quarter-pint  of  cream  for  the  coffee  is  usually 
sufficient  for  the  average  sized  family. 

Much  wholesale  cream  is  sold  in  bulk  to  confectioners  who  manu- 
facture their  own  ice  cream,  to  large  hotels  and  restaurants,  and  to 
drug  stores  that  use  a  large  amount  of  cream  and  have  facilities  to 
handle  it  in  bulk  form.  In  Chicago  bulk  cream  sales  constitute  about 
50  percent  of  all  wholesale  cream  sold  to  the  regular  trade.  Establish- 
ments which  use  only  a  small  amount  of  cream  generally  purchase  it 
in  quart  bottles,  since  with  limited  facilities  it  is  more  conveniently 
handled  in  that  form. 

Certified  Milk  Sold  Mostly  in  Quarts. — The  factors  responsible  for 
the  popularity  of  quarts  in  the  sale  of  regular  milk  also  account  for 
the  large  percentage  of  quart  sales  of  certified  milk  (Table  23).  A 
quart  more  nearly  supplies  the  average  household  requirements  and 
generally  is  less  expensive  proportionately  than  are  pints.  Retail 
quart  sales  ranged  from  77  percent  to  88  percent  of  the  total  sales  in 
three  markets.  Very  little  of  the  milk  was  sold  wholesale. 

Cocoa  Drinks  Sold  Mostly  in  Pints. — Cocoa  drinks  are  ordinarily 
used  in  addition  to  milk.  They  are  regarded  by  many  as  a  luxury  for 
children,  rather  than  as  a  milk  substitute,  and  hence  they  are  sold 
mostly  in  the  smaller  units  of  measure. 

Cottage  Cheese. — A  variety  of  volumes  are  employed  in  dispensing 
cottage  cheese  to  the  trade.  In  St.  Louis  the  gallon  is  the  standard 
measure  for  bulk  sales,  while  in  the  other  two  markets  the  pound  is 
most  commonly  used.  The  largest  proportion  of  this  product  is  gen- 
erally sold  in  containers  with  a  capacity  ranging  from  ten  ounces  to 
one  pound. 

Proportion  of  Liquid  Milk  Products  Marketed  in  Various  Forms. — 
The  relative  distribution  of  the  more  important  liquid  milk  products  to 
the  retail  trade  is  shown  in  Table  24  and  Fig.  15.  Fluid-milk  sales 
constituted  approximately  three-fourths  of  total  milk  sales  in  the 
markets  of  Chicago,  St.  Louis,  and  Peoria.  Slightly  less  than  one- 
fourth  of  all  milk  sales  was  sold  as  cream.  The  remainder  was  sold 


228 


BULLETIN  No.  318 


[December, 


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MILK  DISTRIBUTION  IN*  FOUR  ILLINOIS  MARKETS 


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230 


BULLETIN  No.  318 


[December, 


TABLE  24. — PERCENTAGE  OF  TOTAL  MILK  DISPOSED  OF  IN  RETAIL  SALES  AS  WHOLE 

MILK,  CULTURED  MILK,  COCOA  DRINKS,  AND  CREAM  IN  THE  CHICAGO, 

ST.  Louis,  AND  PEORIA  MARKETS 

(Reduced  to  3.5-percent  milk  base) 


Chicago 
1925-1926 

St.  Louis 
1925 

Peoria 
1926-1927 

Milk  (excluding  certified)  

68.77 

74.94 

79.61 

Cultured  milk  

1.51 

1.75 

.94 

Cocoa  drinks  

.96 

.59 

Cream  

28.76 

23.31 

18.86 

Ratio  of  milk  to  cream  sales  

100.00 
2.39:1 

100.00 
3.21:1 

100.00 
4.22:1 

Volume  (pounds)  on  which  per- 
centages are  based  

935,380,301 

63,578,262 

6,902,010 

in  the  form  of  liquid  by-products ;  namely,  cultured  milk  and  cocoa 
drinks.  From  an  economic  standpoint  the  most  significant  point  in 
connection  with  these  data  is  the  ratio  of  milk  to  cream  sales,  since 
cream  is  generally  the  more  profitable  of  the  two  products.  Other 


10Q  Chicago  St.   Louie  Peoria 


40 


20 


E2Z3   Milk         CZ3  Cultured  milk 


Cream 


Cocoa  drinks 


FIG.  15. — PROPORTION  OF  TOTAL  MILK  SOLD  IN 

VARIOUS  FORMS  TO  THE  RETAIL  TRADE  IN 

THE  CHICAGO,  ST.  Louis,  AND 

PEOKIA  MARKETS 

The  ratio  of  milk  to  cream  sales  was  highest 
in  Chicago,  2.39  to  1,  and  lowest  in  Peoria, 
4.22  to  1.  The  St.  Louis  milk  distributors  did 
not  handle  cocoa  drinks.  See  Table  24  for  data 
on  which  graph  is  based. 


MILK  DISTRIBUTION  ix  FOUR  ILLINOIS  MARKETS  231 

conditions  being  the  same,  the  larger  the  portion  of  the  milk  supply 
consumed  as  cream,  the  more  favorable  is  the  position  of  the  market 
from  the  standpoint  of  the  distributor.  Chicago,  with  a  ratio  of  2.39 
units  of  milk  to  1  of  cream,  has  the  most  favorable  position  of  any 
of  the  three  markets  in  this  respect.  Peoria,  with  a  ratio  of  4.22  units 
of  milk  to  1  of  cream,  is  in  the  least  favorable  position. 

Several  reasons  have  been  suggested  for  the  variation  in  the  ratio 
of  milk  to  cream  sales  in  different  localities.  More  than  three-fourths 
of  the  total  cream  consumed  by  the  regular  fluid-milk  trade  con- 
tains approximately  22  percent  butterfat  (Table  22).  Since  this  is 
used  chiefly  as  coffee  cream,  it  apparently  would  be  logical  to  believe 
that  climate,  nationality,  and  other  factors  influencing  the  amount  of 
coffee  used  would  have  some  effect  upon  the  rate  of  cream  consumption. 
Price  undoubtedly  has  considerable  bearing  upon  cream  sales.  As  it 
is  possible  to  use  condensed  milk  in  place  of  cream,  relatively  high 
cream  prices  would  be  expected  to  encourage  the  use  of  substitutes. 

SURPLUS  MILK 

The  term  surplus  milk  has  acquired  various  meanings  as  applied 
to  production  and  distribution.  From  the  standpoint  of  the  dealer, 
surplus  is  sometimes  thought  of  as  being  milk  in  excess  of  fluid-milk 
sales.  It  is  also  regarded  as  milk  in  excess  of  the  sales  of  all  dairy 
products  processed  and  manufactured  by  the  dealer  for  distribution 
to  the  fluid-milk  trade.  The  first  definition  would  include  sweet  cream 
within  the  meaning  of  surplus  milk.  This  would  seem  illogical  since 
surplus  is  generally  regarded  as  a  burden  to  the  dealer  in  a  flat-price 
market,  and  sweet  cream  is  one  of  the  dealer's  most  profitable  products. 

In  this  discussion  the  term  surplus  milk,  from  the  standpoint  of 
the  distributor,  is  used  to  designate  all  milk  in  excess  of  that  which 
is  regularly  dispensed  to  the  fluid-milk  trade  in  various  product  forms 
except  that  dispensed  in  the  form  of  butter.  Cream,  cultured  milk, 
cocoa  milk  drinks,  and  cottage  cheese  are  therefore  not  considered  as 
surplus  products  but  as  a  regular  part  of  the  fluid-milk  trade  re- 
quirements. Butter  is  included  as  surplus  mainly  for  two  reasons. 
The  returns  on  butter  manufactured  from  excess  milk  are  generally 
smaller  than  those  incurred  from  the  sales  of  the  other  by-products 
which  are  regularly  dispensed  to  the  fluid-milk  trade ;  and  the  aver- 
age firm  does  not  manufacture  butter  from  excess  milk,  but  does 
manufacture  the  other  by-products. 

Since  milk  sold  for  manufacturing  purposes  yields  a  much  smaller 
gross  return  than  that  sold  for  fluid  consumption,  dealers  in  districts 
where  it  is  necessary  to  carry  a  large  surplus,  and  where  a  flat  price 
is  paid  producers  for  all  milk,  are  at  a  disadvantage  when  fluid-milk 
prices  are  much  above  those  paid  by  manufacturers.  When  milk  is 


Bur:  N         U  [December, 

"i~ed  and  priced  in  accordance  with    ta        -.  as  is  the  case  in  - 
listriets,  SOT]      s  g  -  tag      ;>  to  the  deal' 

Causes  of  Dealer's  Surplus 

The   Lealer's  sar]      si  from  the  ope- 

more    f  several  diffei 

;:iiformity  in  production  is  by  far 

the  most  imp<  .  _  milk.     A-  .ed  on 

pages  IS  2   .:.'.: 33,  this  m;.  ttril         1 1     several    liffi 

Norm:  i  is          ts  1      -  -   the  moir    B         April. 

I        and  June,  and  the  lowest  during  the  late  fall  and  winter  months. 

[jet  us  sap]  res  the  total  milk  supply 

f  ten  t]     is      I  prod       rs  1     i      t  tl  -          -          milk  and 

j  season  n  the  surplus 

a  and  pi>  per  dair  _  0  per- 

•hat  amount  in  ei     as 

the  reg  ing   they  purchase  only  from 

farmc.        Befosal  to  1  :-usand  dairies 

wou.  _  _      r  fluid-milk  production. 

^  :  altho  not  entirely 

:rm,  is  i.  :  regular  as  production.     The  largest  variation 

gener  :.g  the  months  of  July  an  :  A    g  <t  in  our  large 

itiea  ;  eople  are  away  on  vu  -  ::iount  of  milk 

seasons  oi  'he  year  usually  varies  only 
slightly  from  the  aver  - 

Irr-  L— Dai]      lemand  U     LB  jular. 

ta  may  be  as  much  or  more 
for  a  particular  day  of  1  r  the  other  six  days. 

".ly  true  in  r—  retail  cream  sal  'ional  holidays 

demand  for  milk  products  much  above  normal  daily 
requirements.     Public  gatherings,  includir..  -pecial  oc- 

.nd  other  similar  events  that  attract  people  from  other  com- 
munities, temporarily  increase  demand  in  the  particular  city  under 
variations  in  weather  conditions  generally  in- 
crease or  decrease  cor-  n  roughly  in  proportion  to  the  rise  or 
fall  in  temperature.     Bulletin  269  of  this  Station,  by  Ross,  presents 
••vhieh  indicate  th  rnperature  upon  milk  consumption. 

Better  Transportation  Reduces  Dealer's  Surplus 

Dealer--  iiminish  as  improvement  in  milk  trans- 

portation develops.  Ample  transportation  facilities  increase  the  flexi- 
bility of  trade  in  milk  and  cream.  Cities  surrounded  by  good  roads 
often  are  able  to  use  motor  trucks  to  assist  in  meeting  emergency  de- 
mands for  these  products.  Main  rail  lines  materially  aid  cities  in 


19X8]  :•'.-' 

securing  incidental  shipments  of  milk  and  cream  on  short  not: 

supplement  the  regular  - 

facilii:  it  difficult  to  _  tal  pur- 

of  the  •-•>;       F  :i  charge 

higher  when  shipping  to  such  mark- 
Problem  Varies  With  Size  of  Market 

Dealers,  except  I.  large  on<-         itieslarg  gbtof    -port 

cream  jobl  _  -  -  milk  that 

in  smaller  cities  do  not  Sh  demand  for  fluid  milk 

temporarily  increase,  these  distributors  may  the  milk  thai 

is  regularly  a  sed  demand, 

and  replenish  th  lired  cream  su] 

jobbers.    In  so  doing,  deal  ra 
surplus. 

Distribu  I  in  milk 

must  carry        •  soi       si      i      '•  I       these  i 

too  small  to  support  cream  jobber- 
suiting  from  recurrent  flu*  tot  larg  - 
incidt;                                 :.ilk  and  cream  from  jobbers  in  *". 
ities.    <       a           '       emergency  E       -          ssitate  the        rying 
surplus.     In  the  small  cities  not                                • 
and  where  the            -              y  small  dealer  ut  not 
often,  contract  with  farmers  to  take  b'.v                -   :-f  the  total  weekly 
milk  production  durm_                                        >:ich  a  contract  usually 
can  be  made  only  with  farmers  having  but  i- 

however,  for  dealers  To  use  this  method  of  avoiding  surplus  to  any  great 
extent. 

Largest  Dealers  Carry  the  Surplus 

Large  dealers,  in  distrio  :here  are  no  regular  cream  jobbers 

operating,   carry  practically  all  the   surplus  milk   for   the   n. 
Even  in  markets  where  cream  jobbers  operate,  one  or  more  of  the 
largest  dealers  generally  must  carry  a  surplus  owing  to  the  fact  that 
their  emergency  requirements  may  be  greater  than  the  supply  of  cream 
jobbers.     The  magnitude  of  the  I  of  large  dealers  generally 

enables  them  to  command  the  requi:  ~al  for  financing  the  manu- 

facture of  surplus  milk. 

Emergency  demands  of  small  dealers  ordinarily  are  not  large  and 
may  be  supplied  from  any  one  of  several  c  milk  and 

cream.  Often  they  rely  upon  large  distributors  for  their  incidental 
needs.  Small  amounts  of  milk  and  cream  are  occasionally  available  at 
ice-cream  factories  and  condensaries  located  in  the  district.  Small 
dealers  who  carry  a  surplus  are  generally  at  a  great  disadvantage. 


234  BULLETIN  No.  318  [December, 

owing  to  the  fact  that  their  surplus  output  is  too  small  and  irregular 
to  command  a  favorable  market  outlet. 

Effect  of  Dealers'  Surplus  on  Producer  Prices 

There  is  no  escaping  the  fact  that,  either  directly  or  indirectly, 
the  amount  of  surplus  milk  in  a  market  is  reflected  in  the  returns 
that  the  producer  receives  for  his  milk.  In  markets  offering  a  flat 
price  for  all  milk,  prices  are  reduced  roughly  in  proportion  to  increases 
in  the  amount  of  surplus.  In  markets  where  the  producer's  price  is 
based  on  the  use  made  of  the  milk,  variations  in  the  amount  of  surplus 
cause  variations  in  the  pool  price. 

Flat-Price  Plan. — Two  principal  plans  for  the  purchase  of  milk 
are  followed  in  the  state.  The  bulk  of  the  milk  is  purchased  on  a  flat 
price  basis ;  that  is,  milk  dealers  contract  to  pay  one  price  for  all  milk 
for  a  particular  period.  At  times,  however,  some  modifications  are 
made  in  this  plan.  In  a  few  districts,  during  the  surplus  season,  some 
of  the  dealers  pay  the  prevailing  milk  price  for  only  a  definite  amount 
of  milk,  such  amount  being  based  upon  producer  receipts  during  one 
or  more  previous  months  of  lowest  production  for  the  year.  Milk  in 
excess  of  this  amount  is  purchased  from  the  producer  at  a  reduction. 

In  districts  where  dealers  purchase  on  a  flat-price  basis,  it  behooves 
them  to  maintain  their  surplus  at  a  minimum  or  else  take  large  losses 
on  such  milk  should  the  prices  which  they  are  paying  producers  be 
much  higher  than  prices  paid  by  manufacturers.  Generally  speaking, 
the  spread  between  prices  paid  producers  by  fluid-milk  dealers  in  these 
districts  and  those  paid  by  manufacturers  is  inversely  propor- 
tional to  the  amount  of  surplus  that  must  be  carried  by  milk  dealers ; 
that  is,  the  spread  is  large  when  the  surplus  is  small  and  small  when 
the  surplus  is  large.  Consequently,  in  markets  where  the  flat-price 
system  is  operating  and  dealers  of  necessity  carry  considerable  surplus, 
average  prices  to  producers  are  nearer  than  otherwise  to  the  general 
level  of  manufacturing  prices. 

Price  Based  on  Purpose  for  Which  Milk  Is  Used. — A  somewhat 
more  satisfactory  plan  may  be  carried  out  in  districts  where  producers 
and  dealers  are  well  organized.  Two  or  more  classifications  of  the 
milk  supply  are  made  according  to  the  purposes  for  which  the  milk  is 
to  be  used.  The  prices  paid  producers  for  milk  sold  in  fluid  form 
are  based  mainly  on  consumer  prices  for  such  milk,  while  prices  for 
milk  used  for  manufacturing  are  in  line  with  the  general  price 
level  of  manufactured  milk  products.  The  adoption  of  such  a  plan  in 
the  Peoria  district  has  encouraged  milk  dealers  to  enlarge  their  manu- 
facturing facilities,  and  thereby  has  enlarged  the  market  for  milk  in 
that  particular  dairy  section.  Producers  generally  take  tadvantage  of 


1928]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  2.'ir) 

larger  market  capacity  and  increase  their  production  even  tho  in- 
creases in  surplus  will  result  in  lower  pool  prices. 

Amount  of  Surplus  in  Illinois  Markets 

The  amount  of  surplus  milk  and  the  difficulties  arising  from  it  have 
at  times  been  exaggerated  in  Illinois  markets.  The  various  conceptions 
of  the  meaning  of  surplus  undoubtedly  have  been  partly  responsible. 
Generally  speaking,  in  flat-price  markets  conditions  of  the  recent  past 
have  enabled  dealers  to  reduce  either  the  amount  of  surplus  milk  or 
the  losses  generally  arising  from  it,  tho  there  are  a  few  exceptions  to 
this  rule. 

Chicago. — The  amount  of  surplus  carried  by  Chicago  distributors 
is  less  than  it  formerly  was.  Furthermore,  there  are  more  dealers  than 
formerly  that  do  not  maintain  any  surplus  whatever,  and  those  who  do 
have  substantially  reduced  the  amount.  As  previously  mentioned, 
many  distributors  now  depend  upon  the  cream  jobbers  for  additional 
requirements. 

It  is  evident  from  the  data  in  Table  25,  which  is  representative  of 
a  large  part  of  the  distribution  in  Chicago,  that  a  material  reduction 

TABLE  25. — PERCENTAGE  OF  SURPLUS  MILK  RESULTING  FROM  DISTRIBUTION  OF 
APPROXIMATELY  ONE-THIRD  OF  CHICAGO'S  MILK  SUPPLY',  1921-1927 


Year 

Percentage  surplus 
based  on  total 
purchases 

1921  

7.8 

1922  

6.4 

1923   

6.1 

1924      

7  3 

1925  

3.7 

1926  

1.9 

1927  

3.6 

'This  distribution  cannot  be  taken  as  representative  of  the  market  as  a  whole, 
since  only  the  very  largest  dealers  carry  a  large  amount  of  surplus.  In  calculating 
the  surplus,  all  milk  and  cream  purchases  were  converted  to  a  3.5-percent  butter- 
fat  base. 

in  the  amount  of  surplus  has  occurred  during  the  seven-year  period 
beginning  with  1921.  Surplus  milk  resulting  from  approximately  one- 
third  of  Chicago's  total  distribution  declined  from  7.8  percent  in  1921 
to  1.9  percent  in  1926,  but  rose  to  3.6  in  1927.  The  amount  of  surplus 
for  1926  was  somewhat  lower  than  normal,  owing  to  restrictions  in 
supply  resulting  from  tuberculin  test  requirements. 

St.  Louis. — The  large  distributors  in  the  St.  Louis  district  handle 
a  large  volume  of  surplus  milk.  Many  large  milk  plants  are  equipped 
with  machinery  for  manufacturing  surplus  milk  into  various  products, 
including  condensed  and  evaporated  milk,  ice  cream,  and  butter.  This 


236 


BULLETIN  No.  318 


[December, 


market  is  not  located  in  an  intensive  dairy  district,  nor  is  it  near  other 
large  markets.  Consequently  there  are  no  large  cream  jobbers  upon 
whom  the  distributors  can  depend  for  additional  purchases. 

Quincy. —  Surplus  milk  has  never  appreciably  burdened  Quincy 
distributors.  Competitive  outlets  for  milk  in  this  district,  except  the 
butterfat  markets,  are  minor  in  comparison  with  the  milk  supply  of  the 
district.  A  potential  supply  much  larger  than  the  demand  of  this 
fluid-milk  market  is  available  at  the  fluid-milk  price  practically  thru- 
out  the  entire  year.  Adequate  transportation  facilities  make  it  pos- 
sible for  Quincy  distributors  to  command  this  supply  on  short  notice. 
This  market,  like  Chicago  and  St.  Louis,  purchases  on  a  flat  price 
basis. 

Peoria. — The  Peoria  market  receives  considerable  surplus  milk. 
Thru  the  operation  of  a  milk  marketing  plan  producers  are  paid  manu- 

TABLE  26. — MONTHLY  VARIATION  IN  SURPLUS  MILK  IN  PEORIA  MARKET1 

OCTOBER  1,  1926,  TO  JANUARY  1,  1928 

(Based  on  approximately  90  percent  of  total  distribution 

to  fluid-milk  trade) 


Year 

Month 

Percentage 
surplus 

1926 

October  

23.62 

November  

23.47 

December  

22.37 

1927 

January  

23.07 

February  

31.78 

March       .                   .           .... 

29.36 

April  . 

36.04 

May 

51.32 

June 

58.73 

July  

55.41 

August  

52.20 

September  

43.51 

October  

39.29 

November  

33.01 

December  

32.98 

Prices  paid  for  surplus  milk  in  this  district  are  based  on  wholesale  butter  prices 
and  are  less  than  those  paid  for  the  milk  used  for  fluid  consumption. 

facturer's  prices  for  their  surplus.  The  amount  of  surplus  in  the 
Peoria  district  has  been  increasing  during  the  past  year  (Table  26). 
The  minimum  surplus  for  the  year  1927  was  23.07  percent  and  occurred 
during  January,  while  in  June  a  maximum  of  58.73  percent  accumu- 
lated. 

Disposal  of  Surplus  Milk 

Surplus  milk  may  be  converted  into  a  variety  of  manufactured 
products.     A  large  portion  in  most  markets  is  manufactured  into 


1928] 


MILK  DISTRIBUTION  IN  FOUK  ILLINOIS  MARKETS 


237 


condensed  and  evaporated  milk.  Milk,  when  manufactured  in  this 
form,  is  considerably  reduced  in  volume  and  greatly  enhanced  in  keep- 
ing quality,  enabling  it  to  be  stored  in  a  small  space  for  long  periods 
of  time.  Some  dealers  operate  condensing  pans  in  connection  with 
their  milk  plants ;  others  operate  condensaries  and  evaporating  plants 
in  the  districts  of  production. 

The  amount  of  surplus  milk  that  is  condensed  and  evaporated  by 
Chicago  distributors  is  much  less  than  formerly  (Table  27).  These 
distributors,  as  a  rule,  must  sell  their  condensed  product  at  wholesale 
prices,  as  their  output  is  too  irregular  for  the  development  of  a  favor- 
able retail  market.  Consequently  in  flat-price  markets  dealers  often 
can  reduce  their  losses  on  surplus  milk  more  effectively  by  selling  the 
milk  direct  to  condensed-milk  manufacturers  who  have  an  established 
retail  trade,  than  by  condensing  it  themselves.  Eastern  sweet-cream 
markets  now  provide  an  outlet  for  much  of  the  surplus  milk  of  Chicago. 

TABLE  27. — DISPOSAL  OF  SURPLUS  MILK  RESULTING  FROM  DISTRIBUTION  OF  AP- 
PROXIMATELY ONE-THIRD  OF  CHICAGO'S  MILK  SUPPLY,  1921-1926 


Year 

Evaporated 

Sold  to 
manufacturers1 

1921  

perct. 
42 

perct. 
58 

1922  

42 

58 

1923  

36 

64 

1924  

11 

89 

1925  

19 

81 

1926  

13 

87 

'Milk  was  sold  both  in  regular  form  to  condensing  and  evaporating  plants  and  as 
cream  chiefly  to  ice-cream  manufacturers  in  other  cities. 

Very  few  Chicago  distributors  manufacture  any  large  amount  of 
butter  from  surplus  milk,  even  tho  sales  of  butter  on  retail  routes  are 
large.  The  major  portion  of  the  butter  dispensed  thru  this  sales 
channel  is  purchased  in  the  open  market. 

Unlike  Chicago  distributors  many  large  distributors  in  St.  Louis, 
Peoria,  and  Quincy  manufacture  much  of  the  butter  for  the  milk 
route  trade.  The  butter,  which  is  made  of  sweet  cream  from  whole 
milk,  is  of  excellent  quality  and  generally  commands  a  premium 
on  the  routes.  However,  unless  some  profitable  disposition  is  made  of 
the  skim  milk  resulting  from  the  separation  of  the  cream  for  butter- 
making,  the  manufacture  of  surplus  milk  into  butter  generally  proves 
a  costly  means  of  disposing  of  it. 

Large  milk  distributors  in  down-state  sections  somewhat  generally 
engage  in  the  manufacture  of  ice  cream  and  thereby  provide  a  more 
remunerative  outlet  for  surplus  milk  than  that  provided  by  the  usual 


238  BULLETIN  No.  318  [December, 

sales  channels.  This  surplus  outlet  is  especially  well  adapted  to  dealers 
having  a  large  wholesale  milk  trade.  With  such  a  combination,  sales 
and  delivery  costs  per  unit  of  product  may  be  maintained  within 
very  reasonable  limits. 

Skim-Milk  Disposal 

Milk  distributors  that  have  a  large  sweet-cream  trade  or  those 
that  manufacture  their  surplus  milk  into  butter  have  large  quantities 
of  skim  milk  to  dispose  of.  In  the  past  much  of  it  was  allowed  to  run 
into  the  sewer  since  it  was  generally  considered  difficult  to  utilize  it 
in  a  manner  that  would  pay  handling  charges  and  yield  a  profit. 
Cultured  milk  and  cottage  cheese  manufacture  provide  favorable  out- 
lets but  the  demand  for  these  products  is  relatively  small  in  proportion 
to  the  available  supply  of  skim  milk.  Farmers  use  skim  milk  for  feed- 
ing purposes,  but  the  demand  for  this  purpose  does  not  always  com- 
mand a  price  that  will  defray  handling  charges. 

In  recent  years  much  of  this  skim  milk  has  been  converted  to 
powdered  form,  and  this  seems  to  be  a  fairly  profitable  manner  of 
disposal.  The  demand  for  powdered  skim  milk  has  been  increasing, 
and  the  price  has  been  sufficiently  high  to  return  the  average  manu- 
facturer a  profit  above  the  total  cost  of  production.  Research  in 
animal  nutrition  has  demonstrated  beyond  doubt  its  feeding  value 
and  thereby  increased  the  demand  for  it- 
Manufacturing  of  skim-milk  po\vder,  however,  is  applicable  only  to 
large-scale  production.  The  original  investment,  covering  installation, 
machinery,  and  equipment  costs,  together  with  the  costs  of  operation, 
require  large  outlays  of  capital  and  volume  production  is  necessary 
for  profitable  operation.  The  greater  portion  of  the  skim-milk  powder 
made  from  the  surplus  of  milk  distributors  is  therefore  manufactured 
in  dairy  districts  which  support  large  distributing  organizations. 

Chicago  being  a  large  cream  market,  it  is  obvious  that  dealers 
would  handle  a  large  amount  of  skim  milk.  A  substantial  portion  of 
this  is  used  in  the  manufacture  of  skim-milk  products.  Figures  based 
on  an  average  annual  skim-milk  production  of  more  than  100  million 
pounds  for  the  years  1921  to  1926,  indicate  that  more  than  50  percent 
of  that  used  for  the  manufacture  of  by-products  was  converted  into 
powder  (Table  28).  Less  than  5  percent  was  used  for  casein  manu- 
facture. The  amount  used  in  the  manufacture  of  cocoa  drinks  and 
soft  cheese  has  been  steadily  increasing.  In  1926  approximately  6 
percent  of  the  total  output  represented  in  the  table  was  used  for  making 
cocoa  drinks  and  about  3  percent  for  soft  cheese  manufacture. 

During  the  six-year  period  farmers  purchased  large  quantities  of 
fikim  milk  from  country  bottling  plants  for  feeding  purposes.  Sales 


1928] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


239 


TABLE  28. — YEARLY  DISPOSAL  OP  SKIM  MILK  IN  CHICAGO,  1921-1926 

(Figures  indicate  percentage  of  total  yearly  supply  and  are  based  on  average  yearly 

skim-milk  production  of  more  than  100  million  pounds) 


Disposition  and  uses 

1921 

1922 

1923 

1924 

1925 

1926 

Sold  to  trade1  

15.49 

12.02 

15.30 

11.57 

12.42 

14.84 

Sold  to  farmers  

54.70 

54.19 

9.88 

46.31 

32.63 

12.74 

Cultured  milk  manufacture  

10.16 

8.50 

9.13 

7.23 

8.30 

11.70 

Cocoa  drink  manufacture  

2.16 

3.50 

5.85 

Soft  cheese  manufacture  

.50 

1.14 

1.24 

1.59 

3.04 

Powdered  milk  manufacture.  .  .  . 
Casein  manufacture  

15.85 
3.80 

24.79 

54.43 
3.69 

•26.21 

5.28 

33.46 
1.18 

36.80 
.51 

Condensed  skim-milk  manufac- 
ture .            

6.43 

6.92 

14.52 

Total  

100.00 

100.00 

100.00 

100.00 

100.00 

100.00 

Principally  to  manufacturers. 

to  farmers,  however,  declined  from  54.7  percent  of  total  skim  milk 
handled  in  1921  to  12.74  percent  of  that  carried  in  1926.  It  is  ex- 
pected, that  farmer  purchases  will  continue  to  decline,  owing  to  the 
fact  that  dealers  are  gradually  discontinuing  the  bottling  of  milk  in 
the  country,  since  tank-car  shipments,  because  of  their  greater 
economy,  are  gradually  supplanting  case  shipments. 

Very  little,  if  any,  skim  milk  is  sold  to  the  retail  trade,  as  the  cost 
of  delivery  is  out  of  proportion  to  its  value  as  a  food  product.  Of  the 
amount  that  was  sold  for  all  purposes  in  the  period  covered  by  this 
study,  manufacturers  purchased  the  greater  portion.  The  average 
annual  amount  sold  to  the  trade  was  approximately  13  percent  of 
the  total. 

COSTS  AND  MARGINS  IN  MILK  DISTRIBUTION 

But  little  information  has  been  available  to  the  public  heretofore 
concerning  costs  and  margins  in  the  business  of  milk  distribution. 
Marketing  agencies  as  a  whole  have  been  reluctant  to  submit  complete 
sets  of  cost  records  for  inspection  and  publication,  and  furthermore 
the  various  systems  of  keeping  records  has  made  the  securing  and  com- 
piling of  such  information  difficult. 

The  cooperation  of  a  representative  number  of  milk  dealers  in  the 
four  leading  markets  of  Illinois  made  possible  this  publication  of  facts 
relating  to  distribution  costs.  In  the  compilation  of  the  data  many 
difficulties  were  encountered,  principally  on  account  of  the  diversity 
of  methods  used  in  keeping  financial  records,  but  most  of  such  diffi- 
culties have  been  overcome  in  so  far  as  practical  considerations  are 
concerned. 

One  obstacle  nearly  always  met  when  compiling  cost  records  of 
various  organizations  is  that  of  varying  fiscal  years.  The  records 


240  BULLETIN  No.  318  [December, 

used  in  this  survey  were  based  upon  twelve-month  periods  beginning 
as  early  as  November  1  and  as  late  as  May  1.  The  greater  part  of 
them,  however,  began  on  January  1.  Since  neither  the  time  nor  the 
necessary  data  were  available  to  rearrange  the  costs  so  as  to  base  them 
on  exactly  the  same  period,  the  figures  in  the  annual  cost  tables  do 
not  always  represent  the  same  identical  period  tho  they  do  in  every 
case  represent  twelve  months  of  operation.  The  fiscal  year  is  given  as 
the  calendar  year  that  includes  the  greater  portion  of  the  twelve-month 
period.  From  a  practical  standpoint,  the  resulting  inconsistency 
would  appear  insignificant,  since  no  abrupt  changes  occurred  during 
the  period  covered  by  the  study  in  the  distribution  costs  in  any  of  the 
districts  surveyed. 

Because  of  different  systems  of  accounting  used  by  different  com- 
panies it  was  necessary  to  adopt  rather  general  classifications  in  sum- 
marizing expense  data.  A  brief  description  of  these  follows : 

Net  Sales. — These  consist  of  the  gross  receipts  from  the  sale  of  milk 
and  milk  products  less  discounts  and  allowances.  Wholesale  as  well 
as  retail  sales  were  included  in  so  far  as  wholesale  sales  were  made  by 
the  dealers  whose  records  wrere  studied.  Some  of  the  firms  handled 
bulk  milk  as  a  part  of  the  wholesale  business. 

Cost  of  Product. — Under  this  head  is  included  the  net  cost  of  all 
milk  and  milk  products  that  were  sold  plus  milk  that  was  lost  in  the 
process  of  marketing  and  usually  referred  to  as  shrinkage.  Records 
were  not  always  kept  by  all  of  the  cooperating  distributors  of  the  loss 
of  milk  that  occurred  during  distribution,  but  the  data  that  were 
available  for  the  various  districts  indicate  that  this  loss  was  about 
the  same  in  all  and  hence  similar  to  that  shown  for  the  Chicago  dis- 
trict in  Table  44  in  the  Appendix,  which  averaged  about  1  percent  of 
the  total  milk  purchased. 

Gross  Margin. — The  gross  margin  is  the  difference  between  net  sales 
and  the  cost  of  the  product.  If  an  organization  is  to  yield  a  net  profit 
upon  its  regular  business  operations,  this  gross  margin  must  of  course 
be  larger  than  the  total  of  all  expenses. 

Purchasing,  Receiving,  and  Processing  Expense. — This  classifica- 
tion is  practically  self-explanatory.  The  expense  incurred  generally 
began  with  costs  of  soliciting  milk  in  the  country  and  terminated  after 
the  milk  had  been  processed,  bottled,  and  loaded  in  wagons  or  trucks 
at  the  loading  platform  of  the  pasteurization  plant.  Some  of  the 
dealers,  howerver,  who  cooperated  in  this  work  did  not  operate  country 
receiving  stations.  All  container  costs,  including  cans,  cases,  and 
bottles,  were  charged  under  this  classification. 

Selling  and  Delivery  Expense. — Under  selling  and  delivery  are  in- 
cluded all  expenses  incurred  in  advertising  and  promoting  the  sale  of 


1928]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  241 

milk  and  in  its  delivery.  It  includes  rent  of  barns,  garages,  and  all 
other  buildings  such  as  stores  or  distributing  stations  which  may  be 
considered  necessary  to  selling,  and  the  maintenance  of  horses,  wagons, 
motors  and  any  other  equipment  used  in  the  distribution  of  the  prod- 
uct. The  initial  stage  of  delivery  began  at  the  loading  platform  of 
the  pasteurizing  plant  after  the  product  had  been  loaded  for  the  milk 
salesmen.  Where  distributing  branches  were  operated,  the  expenses 
of  transporting  the  product  from  the  pasteurizing  plant  to  the  dis- 
tributing branch,  plus  unloading,  refrigeration,  reloading,  and  other 
related  expenditures,  were  put  in  this  classification.  Wages  con- 
stituted considerably  more  than  50  percent  of  the  expenditures  in 
this  group. 

General  and  Administrative  Expense. — The  greater  portion  of  the 
expense  in  this  group  included  executive  and  general  office  salaries. 
In  addition,  a  few  general  costs  are  included  which  could  not  be  placed 
elsewhere  without  complication.  Taxes  may  be  given  as  an  example 
of  such  an  item. 

Net  Income. — This  is  the  portion  of  the  income  remaining  after  all 
expenses  are  subtracted,  and  represents  earnings  on  investment.  It 
is  available  for  dividends  to  stockholders,  expansion  of  the  business, 
compensation  for  business  risks,  as  well  as  for  certain  types  of  taxa- 
tion. In  adverse  years  expenses  of  some  firms  were  found  to  be 
greater  than  gross  margins,  which  meant  that  the  business  during  that 
fiscal  year  had  been  operated  at  a  loss. 

Depreciation  is  not  given  a  separate  heading  but  was  charged 
against  the  property  used  in  each  of  the  other  classifications. 

Distribution  of  the  Consumer's  Dollar 

The  distribution  of  the  costs  involved  in  the  marketing  of  fluid  milk 
in  the  Chicago,  St.  Louis,  Peoria,  and  Quincy  areas  for  different 
periods  during  the  years  1924  to  1927  are  shown  in  Table  29  and  Fig. 
16  on  a  percentage  basis.  By  reading  100  as  100  cents,  or  $1.00,  and 
the  other  figures  in  the  same  way,  the  reader  can  see  what  costs 
and  what  margin  of  profit  entered  into  each  dollar  which  the  consumer 
paid  for  fluid  milk. 

It  is  believed  that  the  figures  in  this  table  give  an  accurate  picture 
of  the  cost  of  distribution  in  so  far  as  the  records  of  the  companies  co- 
operating in  this  study  are  representative  of  the  different  markets.  It 
must  be  emphasized,  however,  that  conditions  in  the  four  markets  are 
by  no  means  identical,  and  any  attempt  to  pass  judgment  upon  the 
comparative  efficiency  of  their  agencies  of  distribution  might  prove 
misleading.  At  best,  only  a  rough  parallelism  can  be  established 


242 


BULLETIN  No.  318 


[December, 


TABLE  29. — COSTS  AND  MARGINS  IN  MARKETING  FLUID  MILK  IN  FOUR  MARKETS 

SUPPLIED  BY  ILLINOIS  PRODUCERS 
(Expressed  in  percentages  of  net  sales) 


Chicago 
1925-1926 

St.  Louis 
1924-1926 

Peoria 
1924-1926 

Quincy 
1924-1927 

Net  sales  

100.00 

100.00 

100.00 

100.00 

Cost  of  product  

45.68 

51.44 

65.87 

69.18 

Gross  margin  

54  32 

48  56 

34.13 

30.82 

Purchasing,     receiving,     and 
processing  expense  

15.20 

10.77 

16.26 

12.36 

Selling  and  delivery  expense  .  . 
General    and    administrative 
expense  

32.14 
3.54 

29.92 
2  75 

9.95 
6.18 

12.48 
3.22 

Total  expense.  .  .  . 

50  88 

43  44 

32  39 

28.06 

Net  income  

3.44 

5.12 

1.74 

2.76 

Percentage  of  distribution  on 
which  figures  are  based  

35  to  45 

25  to  40 

50  to  60 

45  to  55 

Note.— The  major  part  of  the  sales   in   these   markets  excepting  Peoria  were  retail  sales.      The 
wholesale  sales  included  bulk  milk  sales. 

among  the  markets,  and  the  reader  must  bear  this  in  mind  thruout  the 
discussion. 

Not  only  prices,  but  ratio  of  wholesale  sales  to  retail  sales,  affect 
total  receipts  from  milk  sales.  Obviously  the  total  money  received 
from  a  given  quantity  of  milk  will  be  larger  if  sold  at  retail  prices 
than  if  sold  at  wholesale  prices.  The  ratio  of  wholesale  to  retail  sales 
varied  somewhat  according  to  locality.  In  the  Chicago,  St.  Louis,  and 
Quincy  markets  wholesale  sales  are  only  a  small  percentage  of  total 
sales.  In  the  Peoria  market  they  represent  more  than  50  percent  of 
the  net  sales.  In  this  market  a  large  proportion  is  delivered  by  inde- 
pendent route  owners,  and  it  was  therefore  impossible  to  obtain 
enough  data  based  on  retail  sales  to  furnish  an  accurate  basis  for  com- 
paring the  data  of  this  market  with  the  data  of  the  other  markets. 

Gross  Margin, — Since  the  gross  margin  is  the  spread  between  the 
price  the  dealer  pays  for  milk  and  the  price  at  which  he  sells  it,  we 
should  expect  margins  to  vary  among  markets,  as  prices  are  not  uni- 
form thruout.  Producer  milk  prices,  as  well  as  consumer  prices,  have 
averaged  higher  in  Chicago  than  in  any  of  the  other  three  markets. 
The  gross  margin  in  this  market  must  necessarily  be  large  in  order  to 
meet  the  high  costs  of  distribution.  In  Quincy,  where  distribution 
costs  have  been  lowest,  the  spread  is  smallest.  This  particular  market 
is  somewhat  unique,  however,  in  that  its  consumer  prices  have  been 
lower  than  those  in  any  of  the  other  markets  while  prices  paid  pro- 
ducers have  compared  rather  favorably  with  those  of  the  other  markets. 


1928] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


243 


Total  Expense. — Approximately  51  cents  of  the  consumer's  dollar 
was  utilized  for  total  expense  of  distribution  in  the  Chicago  market. 
In  St.  Louis  about  43  cents  was  required.  In  Quincy,  the  lowest  of 
the  four  markets,  28  cents  was  needed;  in  Peoria,  32  cents.  Since 


100 


Chicago   St.  Louis    Peoria 


Quincy 


YJ_A  Cost  of  product 

II I  ll  Purchasing, 
receiving  and 
processing 


ES  Selling  and 
delivery  exp. 

I   J General  and 
administrative 
expense 


DO  Net  income 

FIG.  16.  —  COSTS  AND  MARGINS  IN  MILK  DISTRIBUTION 

IN  FOUR  MARKETS 

The  total  length  of  each  bar  represents  a  sales  dollar. 
In  Chicago  and  St.  Louis,  where  marketing  costs  are 
higher,  the  producer  received  a  smaller  part  of  the  con- 
sumer's dollar  than  in  Peoria  and  Quincy.  See  Table 
29  for  data  on  which  graph  is  based. 

wages  make  up  a  large  portion  of  this  expense,  total  expenses  were 
naturally  higher,  relatively,  in  the  larger  markets.  Union  labor 
handles  the  milk  supply  of  both  Chicago  and  St.  Louis,  but  the  rate  of 
wages  is  much  higher  in  Chicago. 

Purchasing,  Receiving,  and  Processing, — The  character  of  the  rec- 
ords made  it  impossible  to  break  down  this  classification  into  three  sep- 
arate accounts.  Since  some  of  the  dealers  whose  businesses  were 
studied  combine  these  expenses  into  one  account  and  others  combine 
some  two  of  them,  it  was  necessary  in  this  study  to  consolidate  them. 
Purchasing  and  receiving  expenses  were  naturally  higher  in  the  Chi- 
cago and  St.  Louis  markets,  where  country  receiving  stations  were 
operated. 

In  Chicago  approximately  15  cents  of  each  dollar  was  used  to  de- 


244  BULLETIN  No.  318  [December, 

fray  the  costs  in  this  classification;  in  St.  Louis  11  cents  was  used; 
in  Peoria,  16  cents ;  and  in  Quincy,  12  cents.  In  Peoria  processing 
made  up  a  larger  proportion  of  the  sales  dollar  than  in  the  other  mar- 
kets owing  to  the  fact  that  the  sales  there  were  chiefly  wholesale  and 
delivery  expenses  therefore  low. 

Selling  and  Delivery  Expense. — Approximately  32  cents  of  the  con- 
sumer 's  dollar  was  required  to  sell  and  deliver  milk  in  Chicago;    in 


FIG.  17. — AVERAGE  DISTRIBUTION  OF  THE  MILK 
CONSUMER'S  DOLLAR  IN  FOUR  ILLINOIS 

MARKETS,  1925-1926 

In  these  markets  approximately  46.9  cents 
of  the  consumer's  dollar  goes  to  the  producer. 
Distribution  expenses  have  used  49.7  cents,  and 
3.4  cents  has  been  left  as  net  income  to  the 
dealer  to  cover  interest  on  investment,  business 
risks,  etc.  (Table  29) 

St.  Louis  30  cents.  In  both  markets  this  expense  was  much  higher  than 
the  total  of  all  other  distribution  expenses.  The  wage  rate  paid  drivers 
was  largely  responsible  for  this  fact.  In  Peoria  less  than  10  cents  on 
each  dollar  was  required  to  meet  the  expense  of  selling  and  delivery, 
while  in  Quincy  about  12!/2  cents  was  required.  In  Peoria  and  Quincy 
the  dairy  employees  receive  lower  wages,  and  this  was  reflected  in 
lower  selling  and  delivery  costs.  Low  delivery  costs  in  Peoria,  how- 
ever, may  be  partly  ascribed  to  the  fact  that  the  milk  business  was 
largely  wholesale. 

General  and  Administrative  Expense. — These  costs  made  up  only 
a  small  part  of  the  total  expense.  With  the  exception  of  Peoria,  an 
outlay  of  less  than  4  cents  of  the  consumer's  dollar  was  used  for  gen- 


1928]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  245 

eral  and  administrative  costs.  Since  this  expense  is  about  the  same 
for  either  wholesale  or  retail  distribution,  it  would  be  highest  per  sales 
dollar  in  the  market  having  the  largest  wholesale  business  provided 
other  conditions  were  the  same.  Hence  this  expense,  on  the  basis  of 
the  sales  dollar,  was  highest  in  Peoria,  where  6.18  cents  was  required. 

Net  Income. — The  average  profit  per  sales  dollar  varied  from  1.74 
cents  in  the  Peoria  market  to  5.12  cents  in  St.  Louis.  In  the  Chicago 
market  the  dealers  realized  3.44  cents  and  in  Quincy  2.76  cents.  Net 
losses  from  a  year's  business  operations  were  seldom  encountered. 

Average  Distribution  of  the  Consumer's  Dollar  in  Four  Markets. — 
The  data  obtained  from  the  cooperating  firms  in  the  four  markets  are 
combined  in  Fig.  17  to  show  the  average  distribution  of  the  consumer's 
dollar.  While  these  data  are  for  large  markets,  and  hence  are  not 
truly  representative  of  the  cost  in  small  Illinois  cities,  these  markets 
absorb  more  than  50  percent  of  the  total  milk  produced  in  Illinois  for 
fluid  consumption  and  the  data  therefore  have  considerable  signifi- 
cance. 

The  average  distribution  of  the  consumer's  dollar  for  all  four  mar- 
kets is  very  similar  to  that  for  the  Chicago  market,  as  will  be  noted  by 
comparing  Fig.  17  with  Table  29.  This  is  to  be  expected  since  the  dis- 
tribution on  which  the  Chicago  figures  are  based  is  much  greater  than 
the  combined  distribution  represented  in  the  other  three  markets. 

Distribution  of  Consumer's  Quart  Price 

When  the  total  monetary  receipts  of  all  milk  dealers  operating  in 
a  market  are  divided  by  the  total  quantity  of  milk  sold,  it  is  found 
that  the  average  selling  price  of  a  quart  is  considerably  less  than  the 
retail  quart  price.  This  is  due  to  the  fact  that  dealers  in  fluid  milk 
dispense  milk  to  the  trade  in  different  forms,  in  a  variety  of  units,  and 
at  various  prices.  In  the  Chicago  market  the  wholesale  quart  price 
is  13  cents,  which  is  one  cent  less  than  the  retail  quart  price.  The 
price  of  wholesale  gallons,  when  sold  in  lots  of  5  to  20,  generally  ranges 
from  32  to  40  cents,  which  is  at  the  rate  of  8  to  10  cents  a  quart. 
Again,  a  quart  of  22-percent  cream  retails  for  64  cents,  and  approxi- 
mately 6.3  quarts  of  milk  containing  3.5  percent  of  butterfat  are  re- 
quired to  yield  a  quart  of  22-percent  cream.  Hence  each  quart  of 
milk  sold  as  22-percent  cream  yields  a  gross  return  of  approximately 
10  cents,  or  4  cents  less  than  the  retail  quart  price  for  milk.  Even 
distributors  who  supply  only  the  retail  trade  usually  fail  to  realize 
an  average  return  per  quart  equal  to  the  retail  price  of  a  quart  bot- 
tle of  milk. 

The  average  price  per  quart  for  retail  milk  sales  in  the  Chicago 


246 


BULLETIN  No.  318 


[December, 


district  for  the  two  years  1925  and  1926  (based  on  approximately  18 
percent  of  the  total  distribution)  was  12.9  cents,  which  is  1.1  cent 
less  than  the  retail  price  for  milk  in  quarts  (Table  30).  The  total 
cost  of  marketing  the  retail  quart  was  7.1  cents.  Of  this  amount 
about  4.6  cents  was  spent  for  selling  and  delivery.  After  the  retail 
dealer  had  paid  the  farmer  for  his  milk  and  had  met  the  expenses  of 

TABLE  30. — DISTRIBUTION  OF  THE  CONSUMER'S  AVERAGE  PURCHASE   PRICE   FOR 

RETAIL  MILK  AND  MILK  PRODUCTS  ON  THE  BASIS  OF  A 

QUART  OF  3.5  PERCENT  MILK 

(Based  on  total  retail  sales  for  all  volumes,  involving  an  average  distribution  of  ap- 
proximately 200  million  pounds  yearly.  At  least  95  percent  of  the  sales  were  retail.) 


Customer's  purchase  price        

cents 

cents 
12.9118 

Cost  of  milk  

5.3294 

Gross  margin  

7.5824 

Purchasing,  receiving,  and  processing  expense  

2.1968 

Selling  and  delivery  expense     

4.5988 

General  and  administrative  expense  

.3160 

Total  expense  

7.1116 

Net  income  

.4708 

marketing,  he  had  a  net  income  of  approximately  one-half  cent  a  quart. 
Since  this  study  was  made,  wages  for  all  dairy  employees  in  the  Chi- 
cago market  have  been  increased  $5  a  week.  This  increase  in  wages 
has  been  offset  in  some  cases  by  better  distribution  methods.  Many 
dealers  have  effected  savings  by  increasing  the  efficiency  of  labor  in 
their  plants  and  by  combining  milk  routes. 

Analysis  of  the  Expense  Dollar 

A  detailed  analysis  of  the  expenses  incurred  in  the  process  of  dis- 
tributing milk  in  the  Chicago,  St.  Louis,  Peoria,  and  Quincy  markets 
is  shown  in  Tables  31  to  35. 

By  combining  certain  accounts  general  expense  classifications  have 
been  made  that  render  the  figures  for  the  different  districts  fairly  com- 
parable (Table  31).  The  individual  detailed  accounts  of  each  district 
(Tables  32  to  35)  which  make  up  the  general  expense  classifications 
usually  are  not  comparable.  In  one  district,  for  example,  the  labor 
account  may  include  wages  and  commissions,  while  in  another  it  may 
refer  only  to  wages.  Lack  of  uniformity  in  accounting  was  respon- 
sible for  this  variation  among  districts.  The  data  in  Table  31  are 
shown  graphically  in  Fig.  18. 


1928] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


247 


TABLE  31. — EXPENSES  INCURRED  IN  MARKETING  FLUID  MILK  IN  FOUR  MARKETS 

SUPPLIED  BY  ILLINOIS  PRODUCERS 
(Figures  indicate  percentage  of  total  expenses  absorbed  by  each  item) 


Chicago 
1925-1926 

St.  Louis 
1924-1926 

Peoria 
1924-1926 

Quincy 
1924-1927 

Labor,  salaries,  and  com- 
missions   

65.11 

49.49 

43  56 

50  94 

Processing  and  operating, 
materials  and  supplies  .  . 
Taxes  

10.81 

.72 

17.40 
.98 

12.36 
.92 

19.04 
1  49 

Insurance  

1.07 

2.12 

2.84 

1  47 

Depreciation  

3.63 

8.90 

8  43 

7  03 

Rentals  

.57 

.93 

3  74 

Transportation  

9.21 

4.97 

.59 

.09 

Communication  

.37 

.35 

.61 

25 

Professional  services  

.15 

.56 

.77 

.44 

Unclassified  

1.75 

6.27 

8.20 

5.61 

Advertising  

1.65 

1.74 

6.39 

3.55 

Repairs,  maintenance,  and 
construction  supplies  .  .  . 
Operating  services  

3.97 
.99 

4.22 
2.07 

8.91 
2.68 

4.97 
5.12 

Total  

100.00 

100.00 

100.00 

100.00 

Approximate  average  an- 
nual volume   (pounds) 
on    which    percentages 
are  based  

40,000,000 

40,000,000 

10,000,000 

6,000,000 

Labor,  Salaries,  and  Commissions. — A  larger  share  of  the  expense 
dollar  was  used  in  defraying  the  combined  expense  of  labor,  salaries, 
and  commissions  than  for  any  other  expense  grouping.  In  Chicago 
as  much  as  65  cents  in  each  dollar  was  used  for  this  purpose.  Of  this 
amount  the  major  portion  was  paid  to  route  salesmen.  Each  Chi- 
cago milk  driver,  during  the  period  covered  by  these  data,  received 
a  minimum  wage  of  $45  a  week  plus  commissions,  the  commissions 
being  paid  on  the  basis  of  sales  points.1  A  point  was  credited  to  the 
driver  for  the  sale  of  a  quart  or  pint  of  milk  or  a  half -pint  of  cream, 
and  a  half -point  was  allowed  for  a  third-quart  or  half-pint  of  milk 
(Table  45,  Appendix).  Six-tenths  cent  per  point  was  paid  to  drivers 
for  all  points  acquired  in  a  week  in  excess  of  1,333.  By  referring  to 
Table  36  we  find  that  the  average  retail  driver  in  Chicago  during  these 
two  years  had  a  weekly  total  of  2,097  points.  Hence  on  the  basis  of 
these  figures  the  average  weekly  commission  was  approximately  $4.58. 
This  does  not  take  into  account  the  additional  commission  on  eggs, 
butter,  cheese,  and  a  few  other  products.  For  the  sale  of  each  dozen 
of  eggs,  pound  of  butter,  or  package  of  cheese  containing  10  to  16 
ounces,  the  driver  received  one  cent.  Six  dollars  and  twenty-five 


1  Beginning  May  1,  1927,  the  minimum  wage  was  increased  $5  a  week  for  all 
unionized  employees  in  dairies,  as  mentioned  on  page  246. 


248  BULLETIN  No.  318  [December, 

IQQ  Chicago       St.  Louis         Peoria  Quincy 


30 


EZ3 

iiiiiiin 


i  i  i  ii 


_ 
fflfflnill 


Labor,   salaries,   and  commissions 
Processing  and  operating  materials 

and  supplies 
Taxes 
Insurance 
Depreciation 
Rentals 
Transportation 


nnm 


Communication 


Professional 
Unclassified 
Advertising 
Repairs,   maint.,  and 

construct,    supplies 
Operating  services 


FIG.  18. — ALLOCATION  OF  DISTRIBUTION  EXPENSES 

IN  FOUR  MARKETS 

Amounts  spent  for  labor,  salaries,  and  commissions  were 
smallest  in  Peoria,  where  much  of  the  milk  is  delivered  by  inde- 
pendent route  owners.  Table  31  shows  figures  on  which  graph 
is  based. 

cents  has  been  estimated  as  the  total  weekly  commission  paid  for  retail 
delivery.  The  relief  man  for  the  seventh  day  received  a  total  com- 
pensation of  about  $9.  Hence  the  wage  cost  of  operating  a  retail 
milk  wagon  for  a  week  of  seven  days  was  approximately  $60. 


1988]  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  249 

The  majority  of  the  wholesale  drivers  in  Chicago  did  not  receive 
commissions,  but  were  paid  salaries  of  $48  per  week  of  six  days.  If  to 
these  wholesale  and  retail  driver  expenses  are  added  the  cost  of  a  two- 
weeks  vacation  period  for  each  man  and  the  salaries  paid  for  route 
supervision  and  inspection,  the  expenses  per  week  are  increased  several 
more  dollars. 

In  St.  Louis  the  system  of  payment  was  somewhat  different.  The 
retail  drivers  received  a  minimum  salary  of  $35.75  per  week1  plus 
commissions.  Commissions  were  calculated  on  a  monthly  base,  one 
cent  per  point  being  paid  retail  drivers  for  all  points  over  6,250.  Re- 
lief drivers  were  paid  $42  a  week.  Wholesale  drivers  received  one- 
half  cent  per  point  for  all  points  in  excess  of  12,500  plus  a  minimum 
salary  of  $37  a  week.  In  comparing  the  two  large  markets  the  reader 
should  not  overlook  the  fact  that  sales  points  did  not  always  repre- 
sent the  same  sales  units  in  the  two  localities.  The  differences  are  in- 
dicated in  Table  45  of  the  Appendix. 

The  amount  paid  any  other  single  class  of  employees  was  gen- 
erally less  than  that  paid  drivers.  Officers'  salaries  in  every  instance 
were  only  a  small  percentage  of  the  total  expenses  of  this  group. 

A  fraction  less  than  50  cents  of  the  expense  dollar  was  used  to  pay 
the  costs  of  labor,  salaries,  and  commissions  in  St.  Louis.  About  the 
same  amount  was  required  in  Quincy,  while  in  Peoria  this  expense 
was  about  6  cents  less. 

Processing  and  Operating,  Materials,  and  Supplies. — This  was  the 
second  largest  group  of  expenses,  ranging  from  approximately  11  to 
19  cents  per  expense  dollar  in  the  different  districts. 

Bottle  costs  were  one  of  the  largest  items  in  this  classification. 
In  Chicago,  St.  Louis,  and  Quincy  they  made  up  approximately  one- 
fourth  of  it  (Tables  32,  33,  and  35).  The  expenses  for  other  con- 
tainers, such  as  cans  and  cases,  was  by  no  means  negligible. 

Very  few  people  other  than  distributors  realize  the  extent  of  the 
loss  incurred  in  the  use  of  bottles  for  distributing  milk.  Many  are 
broken  in  the  process  of  handling,  while  others  permanently  pass  out 
of  the  possession  of  their  owners  in  a  variety  of  ways.  Certain  large 
Chicago  firms  during  the  year  1926  had  to  replace  their  quart  bottles 
that  were  in  daily  use  about  every  twenty-five  days.  Pints  had  to 
be  replaced  in  slightly  less  than  half  of  that  time.  Cheese  jars  lasted 
only  about  4  daily  delivery  trips  (Table  46,  Appendix).  Bottle  losses 
in  Chicago,  even  tho  large,  are  believed  to  be  as  small  as,  or  smaller, 


1  St.  Louis  drivers,  both  wholesale  and  retail,  were  not  put  on  a  six-day  week 
working  basis  until  September  15,  1926.  From  September  25,  1924,  to  September 
15,  1925,  they  were  allowed  a  day  off  every  14th  day ;  from  September  15,  1925,  to 
September  15,  1926,  they  were  allowed  every  10th  day. 


250 


BULLETIN  No.  318 


[December, 


TABLE  32. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING  IN 

CHICAGO,  1925-1926 
(Based  on  average  yearly  milk  distribution  of  approximately  40  million  pounds) 


Percentage 


Percentage  of 
total  expenses 


Labor,  salaries,  and  commissions 

i  lountry - l.tifi 

Motor  transportation 1.81 

City  processing 7.91 

General  plant 3.76 

Platform 2. 85 

Barn 4.13 

Route  sales 68.64 

General  sales 5 . 07 

General  administration 4.15 

100.00 

Processing  and  operating,  materials,  and  supplies 

Supplemetary  ingredients  (chocolate,  salt,  etc.) 3 .  87 

Bottles  and  bottle  caps 28.91 

Butter  and  cheese  containers 1 . 87 

Cans,  cases,  and  crates 6.09 

Ammonia  and  coarse  salt .19 

Coal 11 . 74 

Gasoline,  oils,  and  grease 1 . 37 

Ice 12.09 

Lighting  supplies  (lanterns,  oil,  electric  bulbs,  etc.) .72 

Cleaning  supplies 1 . 39 

Laboratory  supplies .03 

Small  tools .05 

Tires .01 

Horse  feed,  bedding,  and  miscellaneous 26.40 

Stationery  and  office  supplies 3.90 

Miscellaneous  (milk  tags,  bottle  carriers,  etc.) 1.37 

100.00 

Taxes 

Insurance. . . . 

Depreciation 

Auto  trucks 5.93 

Horses,  wagons,  and  equipment 28. 38 

Buildings 17.79 

Fixtures 4.24 

Machinery  and  other  dairy  equipment 43 . 66 


Rentals 

General  plant,  sales  stations,  tank  cars,  barn  and  stables,  etc. 


Transportation 

Miscellaneous  country  and  general. 

Freight  and  cartage  to  city 

Trucking — city 


100.00 


.59 
79.03 
20.38 

100.00 


65.11 


10.81 


.72 
1.07 


3.63 


.57 


9.21 


1928] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


251 


TABLE  32. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING  IN 

CHICAGO,  1925-1926— Concluded 
(Based  on  average  yearly  milk  distribution  of  approximately  40  million  pounds) 


Percentage 


Percentage  of 
total  expenses 


Communication 

Postage,  telephone,  and  wires 

Professional  services 

Collection,  legal,  accounting,  and  veterinary. 

Unclassified 

Country  and  city  processing 6 . 70 

Memberships  and  dues 6 . 70 

Subscriptions  and  donations 6.05 

Property  damaged 1 . 72 

Interest  paid 7.97 

Reserved  for  bad  debts 54 . 45 

Miscellaneous 16.41 

100.00 
Advertising 

Repairs,  maintenance,  and  construction  supplies 

Buildings 5. 44 

Machinery  and  equipment 10. 36 

Can  repairs 1.09 

Autos 1 .32 

Furniture,  fixtures,  and  equipment 1 . 77 

Construction  materials,  (lumber,  pipe,  iron  and  steel,  paints, 

oils,  wire,  etc.) 2. 33 

Repair  parts 2. 56 

Horses 24.41 

Wagons 45.32 

Harness 5.40 

100.00 

Operating  services 

Light 17.62 

Power 25.49 

Water 19 . 68 

Hauling 4.25 

Messenger 3.40 

Towel  service 4 . 73 

Miscellaneous  (auto  service,  laboratory,  calculating,  etc.) 24 . 83 

100.00 
Total  expenses . 


.37 


.15 


1.75 
1.65 


3.97 


100.00 


relatively,  than  those  in  the  other  districts,  owing  to  the  efficient  meth- 
ods of  bottle  recovery  employed  in  that  market. 

A  large  part  of  the  expenses  in  this  classification  were  for  delivery 
and  other  transportation  costs.  Of  the  other  expenditures,  fuel  and 
ice  were  generally  the  largest  in  each  of  the  four  districts. 


252 


BULLETIN  No.  318 


[December, 


TABLE  33. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING  IN 

ST.  Louis,  1924-1926 
(Based  on  average  yearly  milk  distribution  of  approximately  40  million  pounds) 


Percentage 


Percentage  of 
total  expenses 


Labor,  salaries,  and  commissions 

Salaries 14.65 

Wages  and  labor 77. 19 

Commissions 8. 16 

100.00 

Processing  and  operating,  materials,  and  supplies 

Cans  and  cases 9 . 27 

Manufacturing .56 

Butter  and  cheese  containers 3 . 75 

Bottles  and  bottle  caps 24 . 64 

Refrigerating  agents  (ammonia,  calcium  chlorid) .73 

Uniforms,  including  laundry .47 

Fuel 6.72 

Ice 4.44 

Small  tools .09 

Lighting  supplies .26 

Miscellaneous  supplies  and  expenses 2.48 

Sanitary  supplies 2. 17 

Laboratory  supplies .24 

Stationery  and  office  supplies 2 . 59 

Horse  feed,  bedding,  and  miscellaneous 16.89 

Gas,  oil,  and  grease 15. 70 

Tires 8.55 

Garage  and  auto  supplies .45 

100.00 

Taxes 

Insurance 

Depreciation 

Buildings 1 . 37 

Office  furniture .63 

Machinery  and  equipment 24.44 

Trucks 32.92 

Delivery  stations 40 . 12 

Water  system .52 

100.00 
Rental 

Transportation 

Hauling 99.52 

Freight  and  cartage  to  stations .48 

100.00 

Communication 

Postage,  telephone,  and  telegraph 

Professional  services 

Legal,  auditing,  veterinary,  collection 


49.40 


17.40 


.08 
2.12 


8.90 
.03 


4.97 


.35 


.58 


19S8] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


253 


TABLE  33. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING  IN 

St.  Louis,  1924-1926 — Concluded 
(Based  on  average  yearly  milk  distribution  of  approximately  40  million  pounds) 


Percentage 


Percentage  of 
total  expenses 


Unclassified 

Fees  and  dues 2.51 

Bonuses 1 . 57 

Interest  and  premiums 19 . 07 

Cash  deficit .40 

Loss  on  property 33 . 62 

Loss  on  merchandise .37 

Bad  debts 4.79 

Miscellaneous 30. 66 

Personal  injuries  and  property  damages 1 . 72 

Commercial  service 1 . 22 

Subscriptions  and  donations 2.96 

Equipment  written  off 1.11 

100.00 
Advertising 

Repairs,  maintenance,  and  construction  supplies 

Buildings 3.21 

Repairs  on  furniture,  fixtures,  and  equipment 1 . 00 

Repairs  on  machinery  and  equipment 27 . 95 

Repairs  on  outside  improvements .91 

Repairs  on  cans  and  cases 2 . 90 

General  supplies  and  repairs 8. 77 

Motor  repairs 43. 23 

Harness  repairs 2 . 39 

Wagon  repairs 9 . 64 

100.00 

Operating  services 

Light  and  power 62. 52 

Water 17. 4f 

Towel  service 1 . 45 

Laboratory  service 2. 76 

Miscellaneous  (testing  milk,  storage  and  commission,  returned 

bottle  expense,  etc.) 15.80 

100.00 
Total  expenses 


8.27 


1.74 


4.22 


2.07 


100.00 


Taxes. — Licenses  are  included  under  this  classification.  All  taxes 
except  those  paid  on  income  to  the  Federal  government  are  a  part  of 
this  figure.  The  more  important  items  included  in  this  classification 
are  state  franchises  and  corporate  fees,  personal  and  real  property 
and  vehicle  taxes,  and  fees  for  milk  licenses.  The  total  outlay  for 
these  expenditures  was  in  every  district  less  than  1.5  percent  of  all 
expenses. 


254 


BULLETIN  No.  318 


[December, 


TABLE  34. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING 

IN  PEORIA,  1924-1926 
(Based  on  average  yearly  milk  distribution  of  approximately  10  million  pounds) 


Percentage 


Percentage  of 
total  expenses 


Labor,  salaries,  and  commissions 

Labor.. 712.00 

Salaries  and  commissions 27 . 94 

100.00 
Processing  and  operating,  materials,  and  supplies 

10.69 

Ice 6.31 

General  supplies 80. 67 

Stationery  and  office  supplies 2 . 33 

100.00 

Taxes 

Insurance. . . . 

Depreciation 

Buildings 27. 53 

Furniture  and  fixtures 7. 62 

Machinery  and  equipment 40 . 49 

Auto  trucks 21 .46 

Horses  and  wagons 1 . 87 

Miscellaneous 1 . 03 

100.00 
Rentals 

Transportation 

Freight,  drayage,  and  storage 

Communication 

Postage,  telephone,  and  telegraph 

Professional  services 

Medical,  auditing/legal,  and  collection. 

Unclassified 

Loss  on  stock  and  property  sales 7 . 36 

Loss  on  bad  debts 23 . 58 

Interest  paid 48 . 92 

Miscellaneous  expense 12. 71 

Fees  and  dues 4. 72 

Donations 2. 71 

100.00 
Advertis'ng 

Repairs,  maintenance,  and  construction  supplies 

Buildings 3.64 

Furniture  and  fixtures .09 

Machinery  and  equipment 16.90 

Autos  and  wagons 64 . 18 

General  supplies  and  repairs 15. 19 


43.56 


12.36 

.92 

2.84 


8.43 
3.74 


.59 


.61 


.77 


8.20 
6.39 


100.00 


8.91 


19S8] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


255 


TABLE  34. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING  IN 

PEORIA,  1924-1926— Concluded 
(Based  on  average  yearly  milk  distribution  of  approximately  10  million  pounds) 


Percentage 

Percentage  of 
total  expenses 

Operating  services 
Light  and  power  

49  26 

Water  

42  22 

Towel  service  

6.06 

Miscellaneous  (garbage  hauling,  scale,  boiler  and  elevator  in- 
spection)                      

2.46 

100.00 

2.68 

Total  expenses  

100.00 

Insurance. — The  disbursements  for  insurance  covered  in  most  cases 
three  types  of  risk;  (1)  loss  by  fire,  theft,  etc.,  of  real  and  personal 
property;  (2)  loss  by  death  of  employer  or  employee;  and  (3)  loss 
by  accident,  either  to  employees  or  to  any  person  or  property  the 
blame  for  which  could  be  placed  upon  the  company.  Insurance  in 
all  four  districts  was  only  a  small  part  of  total  expenses,  ranging  from 
1.07  to  2.84  cents  per  expense  dollar.  Better  buildings  which  are  less 
subject  to  fire  and  other  destructive  forces,  more  efficient  use  of  build- 
ings, materials,  and  equipment  may  have  been  partly  responsible  for 
the  comparatively  low  insurance  expenditures  per  unit  in  the  Chicago 
district ;  and  again  some  corporations  may  have  borne  a  larger  portion 
of  their  own  insurance  risk  than  others  without  charging  it  especially 
as  an  insurance  item. 

Depreciation. — Depreciation  costs  were  variable,  ranging  from  3.63 
cents  per  dollar  of  expense  to  8.90  cents.  The  variation  may  be 
attributed  primarily  to  the  different  policies  of  the  several  cooperating 
companies  in  handling  these  costs  as  well  as  to  the  type  of  buildings 
and  equipment.  The  policies  of  a  business  organization  in  regard 
to  its  accounting  methods  are  usually  controlled  by  the  head  account- 
ant. Since  the  personal  element  is  thus  involved  in  the  estimates  upon 
which  depreciation  rates  are  based,  considerable  variation  among  com- 
panies would  naturally  be  expected. 

Rentals. — The  fact  that  most  milk  dealers  included  in  the  survey 
have  been  established  for  a  long  time,  and  for  this  reason  own  most 
of  their  buildings  and  equipment,  would  in  a  large  measure  account 
for  the  low  rental  costs.  These  were  practically  negligible  in  all  mar- 
kets except  Peoria,  where  3.74  cents  of  each  expense  dollar  was  used. 
In  individual  districts,  however,  conditions  may  be  such  as  to  make 
it  more  economical  to  rent  than  to  purchase  outright. 


256 


BULLETIN  No.  318 


[December, 


TABLE  35. — ALLOCATION  OP  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING 

IN  QUINCY,  1924-1927 
(Based  on  the  average  yearly  milk  distribution  of  approximately  6  million  pounds) 


Percentage 


Percentage  of 
total  expenses 


Labor,  salaries,  and  commissions 

Salaries 21.02 

Wages  and  labor 56. 57 

Commissions 22 . 41 

100.00 
Processing  and  operating,  materials,  and  supplies 

Cans,  cases,  crates 7 . 54 

23.07 

General  supplies  (butter  supplies  and  ingredients,  and  plant  sup- 
plies, etc.) 28. 66 

Office  supplies 2.13 

Horse  feed  and  miscellaneous  expenses 15. 73 

Gas  and  oil 9 . 02 

Fuel 13.85 

100.00 

Taxes 

Insurance. .  . 

Depreciation 

Buildings 17.63 

Office  furniture  and  equipment 2 . 69 

Machinery  and  equipment 51 . 03 

Auto  trucks 12.07 

Horses,  wagons,  etc 16. 58 

100.00 
Transportation 

Freight  and  drayage  in 

Communication 

Postage,  telephone,  and  telegraph . 

Professional  services 

Auditing  and  veterinary  services. . 

Unclassified 

Miscellaneous  expenses 59.49 

Loss  on  equipment  junked 1 . 64 

Loss  on  equipment  sold 14.44 

Interest  paid .20 

Bad  debts 19.30 

Discounts — milk  checks .35 

Subscriptions  and  donations 4 . 58 

100.00 
Advertising. 


50.94 


19.04 
1.49 
1.47 


7.03 
.09 

.25 
.44 


5.61 
3.55 


1988] 


MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS 


257 


TABLE  35. — ALLOCATION  OF  EXPENSES  INCURRED  IN  FLUID-MILK  MARKETING. 

IN  QUINCY,  1924-1927— Concluded 
(Based  on  the  average  yearly  milk  distribution  of  approximately  6  million  pounds) 


Percentage 

Percentage  of 
total  expenses 

Repairs,  maintenance,  and  construction  supplies 

24.24 

Machinery  and  equipment  

30.72 

Cans,  crates,  cases  

3.22 

Auto  trucks  

24.80 

• 

17.02 

Operating  services 
Power  and  light  

100.00 
50.72 

4.97 

Water  

45.25 

4.03 

100.00 

5.12 

Total  expenses  

100.00 

Rental  charges  for  general  plant  buildings  and  equipment,  sales 
stations,  barns,  and  transportation  equipment,  were  the  principal  ex- 
penses in  the  rental  group. 

Transportation. — Expenses  grouped  under  transportation  include 
those  paid  directly  for  transportation  services,  among  which  were  the 
freight  and  trucking  charges  generally  incurred  in  hauling  milk  from 
country  to  city.  Costs  resulting  from  the  use  of  carrier  equipment 
owned  and  maintained  by  the  distributors  themselves  are  placed  in 
other  classifications. 

The  distance  intervening  between  production  centers  and  markets 
was  a  factor  of  much  importance  in  determining  transportation  costs. 
In  the  Chicago  district,  where  the  maximum  haul  was  more  than  350 
miles,  these  costs  were  about  10  percent  of  the  total  expenses,  while 
in  the  St.  Louis  district  they  were  only  approximately  5  percent.  In 
the  Peoria  and  Quincy  markets,  where  country  stations  were  not 
operated  and  the  farmer  delivered  the  milk  to  the  city  plant,  they 
were  less  than  1  percent. 

Communication. — Under  this  head  are  included  expenditures  for 
postage,  telephone,  and  telegraph.  These  ranged  from  a  quarter  of  a 
cent  to  approximately  six-tenths  of  a  cent  per  expense  dollar  in  the 
four  markets. 

Professional  Services. — These  expenses  were  for  skilled  service 
such  as  rendered  by  veterinarians,  accountants,  lawyers,  collection 
agents,  and  other  professional  men.  Like  the  expenses  for  communi- 
cation, they  made  up  a  very  small  part  of  the  expense  dollar. 


258 


BULLETIN  No.  318 


[December, 


TABLE  36. — SEASONAL  VABIATION  IN  WEEKLY  PoiNT1  SALES  PER  ROUTE  IN 
CHICAGO  AND  ST.  Louis  MARKETS2 


Chicago,  1925-1926 

St.  Louis,  1923-1925 

Retail 

Retail 

Wholesale 

January   .  .    . 

points 
2  092.25 
2  120.88 
2  142.00 
2  144.00 
2  132.73 
2  125.05 
2  042.25 
2  050.80 
2  126.25 
2  083.13 
2  064.80 
2  036.50 

2  096.72 

perct. 
99.79 
101.15 
102.16 
102.25 
101.72 
101.35 
97.40 
97.81 
101.41 
99.35 
98.48 
97.13 

100.00 

points 
2  398.66 
2  429.00 
2  371.00 
2  396.33 
2  328.66 
2  277.33 
2  184.00 
2  194.00 
2  275.00 
2  363.66 
2  433.66 
2  382.33 

2  336.14 

perct. 
102.68 
103.97 
101.49 
102.58 
99.68 
97.48 
93.49 
93.92 
97.38 
101.18 
104.17 
101.98 

100.00 

points 
5  245.33 
5  443.66 
5  714.33 
5  642.00 
5  803.00 
6  141.33 
6  101.66 
6  041.00 
5  775.00 
5  646.66 
5  443.66 
5  243.00 

5  686.72 

perct. 
92.24 
95.73 
100.48 
99.21 
102.04 
107.99 
107.30 
106.23 
101.55 
99.30 
95.73 
92.20 

100.00 

February.  . 

Marclf  

April  

May  

June  

July.  . 

August  

September  

October  

November   .  . 

December  .  .  . 

Weekly  average 

Approximate  ave- 
rage annual  vol- 
ume on  which 
data  are  based 

186,  000  ,000  pounds 

63,  000,  000  pounds 

32,  000,  000  pounds 

^ee  Table  45,  Appendix,  for  allocation  of  points.     2The  sales  included  all  dairy 
products  disposed  of  to  the  regular  trade. 

Unclassified. — The  unclassified  expenses  exhibit  considerable  vari- 
ation in  amount  according  to  the  particular  market.  In  Chicago  they 
were  less  than  2  cents  per  dollar.  The  range  in  the  other  three  markets 
was  from  5.61  cents  to  8.20  cents.  These  variations  are  largely  due 
to  differences  in  the  items  placed  here.  There  is  much  difference  of 
opinion  among  accountants  regarding  the  exact  category  to  which 
some  expenditures  belong.  Some  accountants,  for  example,  charge 
bad  debts  to  sales,  while  others  make  no  attempt  to  classify  this  ac- 
count definitely  but  place  it  in  the  unclassified  group.  The  failure  to 
adopt  a  uniform  system  of  accounting  renders  exact  comparability 
impossible. 

Advertising. — The  amount  spent  for  advertising  in  the  two  larger 
markets,  Chicago  and  St.  Louis,  was  less  than  2  percent  of  all  ex- 
penditures. Costs  in  Quincy  were  proportionately  about  twice  as  large 
(3.55  percent)  and  in  Peoria  more  than  three  times  as  large  (6.39 
percent).  This  appears  to  be  quite  natural  when  it  is  considered 
that  there  are  more  distributors  in  the  larger  cities  by  whom  this 
expense  may  be  shared,  and  also  that  more  people  can  be  reached 
per  dollar  spent  where  population  is  more  dense.  The  importance  of 
advertising,  from  the  standpoint  of  the  farmer,  is  apparent  when  it 
is  considered  that  the  rate  of  milk  consumption  per  capita,  as  well 


1928}  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  259 

as  population,  determines  the  capacity  of  the  farmer's  market  for 
milk.  Dairymen  in  some  localities  have  begun  to  realize  the  beneficial 
effect  of  advertising  upon  the  expansion  of  their  markets,  and  where 
organized  are  using  some  of  their  own  funds  for  this  purpose. 

Repairs,  Maintenance,  and  Construction  Supplies. — The  outlay  for 
this  classification  was  rather  uniform  in  three  of  the  four  markets. 
With  the  exception  of  Peoria,  approximately  4  to  5  cents  in  each 
dollar  was  spent  for  these  purposes.  In  Peoria  the  expenditure  was 
about  twice  as  great  (8.91  percent).  The  major  portion  in  all  markets 
was  spent  for  the  maintenance  of  transportation  and  of  plant  equip- 
ment and  machinery.  Only  a  small  part  of  the  total  was,  as  a  rule, 
spent  for  construction  supplies  and  for  the  upkeep  of  buildings. 

Operating  Services. — The  total  cost  of  such  service  as  heat,  light, 
power,  and  water  for  commercial  purposes  depends  principally  upon 
the  degree  of  efficiency  exercised  in  their  use  and  the  rates  charged  for 
them.  In  Chicago  these  expenses  constituted  about  1  cent  of  the 
expense  dollar  and  in  Quincy  about  5  cents.  The  other  two  markets 
ranged  from  2.07  to  2.68  cents.  Rates  generally  vary  with  locality. 
Usually  rates  for  power  are  higher  in  the  small  cities.  Furthermore, 
in  the  smaller  municipalities,  where  the  volume  of  business  is  generally 
much  less  than  in  the  larger  markets,  it  is  impossible  to  use  such 
services  as  efficiently  as  in  the  larger  markets.  In  some  localities 
firms  consider  it  more  economical  to  supply  their  own  service  in  one 
or  more  of  these  lines.  There  are  organizations,  for  example,  that 
drill  and  operate  their  own  water  wells,  and  produce  the  required 
electrical  power  with  their  own  generators. 

Profit  and  Loss  on  Various  Sales  Units 

So  far  the  discussion  has  been  based  upon  the  operation  of  the 
business  as  a  whole  and  scarcely  anything  has  been  said  concerning 
the  costs  and  margins  of  the  different  dairy  products  and  sales  units. 
Unless  dealers '  and  producers '  organizations  know  which  products  and 
sales  units  are  the  more  profitable,  they  cannot  develop  their  markets 
so  as  to  yield  maximum  returns.  A  study  of  this  phase  of  the  milk 
distribution  business  was  made  in  the  Chicago  market.  The  data  are 
based  on  operations  during  1924  and  cover  a  retail  distribution  of 
approximately  150  to  200  million  pounds  of  milk  (Table  37).  The 
major  portion  of  the  cream  supply  included  in  this  distribution  was 
purchased  from  cream  jobbers,  and  hence  only  a  very  small  amount  of 
surplus  was  carried.  Returns  on  the  different  products  and  sales  units 
depend  not  only  on  the  prices  received  but  also  on  the  volume  handled 
and  the  efficiency  of  the  dealer  as  well. 


260 


BULLETIN  No.  318 


[December, 


TABLE  37. — UNIT  PROFITS  AND  LOSSES  ON  RETAIL  MILK  AND  CREAM  PRODUCTS  IN 

CHICAGO  MARKET,  1924 

(The  milk  and  cream  included  are  a  part  of  a  total  distribution  of  approximately 
150  million  pounds  of  milk;  by-products,  200  million  pounds.) 


Products 

Unit  profit 
or  loss1 

Equivalent 
per  quart  of 
3  .  5-percent 
milk 

Whole  milk 
Quarts      .  .         

cents 
.752 

.752 

Pints                        

-1.560 

—  3.120 

Half-pints  

-    .936 

-3.744 

Sweet  cream,  22  percent 
Half  -pints  

1.730 

Half-pints,  on  3.5  percent  milk  base2  

.275 

1.100 

Sweet  cream,  32  percent 
Half-pints                    

2.060 

Half  -pints,  on  3.5  percent  milk  base  

.225 

.900 

Cocoa  drinks 
Pints  

.893 

Cultured  skim  milk 
Quarts  

.643 

Cottage  cheese 
Three-quarter  pound  cartons  

.887 

bosses  are  represented  with  a  minus  sign  before  the  figures. 

2It  requires  6.286  quarts  of  3.5  percent  milk  to  make  one  quart  of  22-percent 
cream.     Since  one  half -pint  of  this  cream  yielded  a  profit  of  1 . 730  cents,  four  half -pints 


yielded  a  profit  of  6 . 92  cents.     Hence, 


equals    1.10    cents,  which  was  the 


6.286 

profit  per  quart  of  3.5-percent  milk  when  sold  as  cream  in  half -pints  at  the  retail 
price.  Similarly  9.143  volumes  of  3.5-percent  milk  are  required  to  make  a  corre- 
sponding volume  of  32-percent  cream. 

Whole  Milk. — Of  the  volumes  listed  in  the  table,  quart  sales  of 
milk  were  the  only  whole-milk  sales  returning  a  profit ;  for  each  quart 
sold  to  the  retail  trade  there  was  a  net  margin  of  .752  cents.  Pints 
were  sold  at  a  loss  of  1.56  cents  each ;  which,  on  a  quart  basis,  would 
be  3.12  cents.  This  loss  occurred  in  spite  of  the  fact  that  pints  sold 
for  8  cents,  which  was  1  cent  more  than  half  the  quart  price.  The 
fact  that  the  cost  of  handling  pints  was  practically  equal  to  that  re- 
quired for  handling  quarts  was  largely  responsible  for  losses  on  pints. 
As  shown  by  Table  46  in  the  Appendix,  the  number  of  pint  bottles 
lost  was  twice  as  great,  relatively,  as  quarts.  Furthermore,  a  pint 
bottle  costs  only  slightly  less  than  a  quart.  Again,  the  costs  of  pro- 
cessing, selling,  and  delivery,  and  administration  were  about  the  same 
for  pint  as  for  quart  volumes.  When  we  consider  that  it  cost  the 
retail  distributor  between  7  and  8  cents  to  handle  a  quart  of  milk 


1928] 


MILK  DISTRIBUTION-  ix  FOUR  ILLINOIS  MARKETS 


261 


TABLE  38. — COMPARISON  OF  AVERAGE  PRICES  PAID  PRODUCERS  FOR  FLUID  MILK 
IN  FOUR  MARKETS,  1923-1927,  AND  PRICES  PAID  BY  DAIRY  MANUFACTURERS 

(Chicago  monthly  fluid-milk  prices  f.o.b.  country  station  are  taken  as  100,  all  other 
prices  are  expressed  as  percentages  of  these.1  All  based  on  3 . 5-percent  milk) 


Month 

St.  Louis 
fluid-milk 
prices 
f.o.b.  country 
station 

Peoria 
fluid-milk 
prices 
f.o.b.  city* 

Quincy 
fluid-milk 
prices' 
f.o.b.  city 

Condensary 
prices4 
f.o.b. 
condensary 

Hypothetical 
returns  to 
cream 
producers5 

January  

91.7 

94.4 

104.4 

86.9 

77.4 

February  

91.7 

93.7 

103.2 

85.7 

77.4 

March  

87.2 

93.6 

104.0 

84.4 

78.4 

April.  .          

80  5 

89.2 

99  6 

81.3 

70.5 

May  

71.7 

86.5 

105.5 

79.3 

70.0 

June  

73.5 

85.0 

106.8 

78.2 

71.3 

July  

73.8 

79.3 

97.7 

72.7 

64.8 

75.0 

80.0 

96.2 

73.8 

65.4 

76  9 

81  5 

99.2 

75.4 

70.0 

October  

82.4 

85.1 

102.0 

78.8 

74.1 

November  

87.4 

88.2 

104.3 

80.7 

79.5 

December  

90.1 

92.5 

104.7 

84.2 

81.8 

'For  actual  prices  see  Tables  49  to  52  in  Appendix.  'The  reader  must  not  overlook  the  fact  that 
the  prices  paid  for  milk  in  the  Peoria,  Quincy,  and  condensary  districts  are  f.o.b.  city,  while  those  paid 
in  Chicago  and  St.  Louis  are  f.o.b.  country  station.  'From  1924  to  1927  only.  ^Prices  were  obtained 
from  market  reports  of  the  Bureau  of  Agricultural  Economics,  U.S.  Department  of  Agriculture,  and 
are  based  upon  the  average  prices  paid  producers  in  the  eastern  section  of  the  Northern-Central  states. 
•These  percentages  were  based  upon  hypothetical  returns  to  producers  for  cream  used  for  butter  man- 
ufacture, which  returns  were  calculated  by  multiplying  the  average  Chicago  monthly  prices  of  butter 
extras  plus  20  percent  by  3.5,  the  latter  figure  being  the  number  of  pounds  of  butterfat  in  100  pounds 
of  3. 5-percent  milk. 

and  only  slightly  less  to  handle  pints,  we  realize  why  pints  were 
sold  at  a  loss  of  1.56  cents. 

It  must  not  be  inferred,  however,  that  individual  milk  dealers 
would  profit  by  sacrificing  their  pint  customers  and  thereby  abandon- 
ing that  part  of  their  business  entirely.  The  sale  of  pints  increases 
the  volume  of  business  and  thus  lowers  overhead  expenses.  It  absorbs 
a  part  of  the  expenses  that  would  have  to  be  borne  by  quarts.  Hence 
the  elimination  of  pint  sales  would  result  in  a  smaller  net  profit  on 
the  sale  of  quarts.  Were  it  not  for  the  fact,  however,  that  the  dis- 
continuance of  pint  sales  altogether  might  cause  a  decline  in  the  per 
capita  consumption  of  milk,  dealers  would  profit  materially  by  such 
a  change. 

Cream. — As  already  stated,  in  most  markets  cream  is  one  of  the 
most  profitable  milk  products  the  dealer  sells  to  the  regular  trade. 
In  the  Chicago  market  during  the  period  studied,  for  each  quart  of 
3.5-percent  milk  sold  as  22-percent  cream  in  half -pint  bottles,  a  net 
profit  of  1.1  cents  was  realized,  which  is  considerably  more  than 
that  realized  from  the  sale  of  a  quart  of  fluid  milk.  The  profit  from 


262  BULLETIN  No.  318  [December, 

32-percent  cream  was  .9  of  a  cent.  The  cream  upon  which  these 
margins  were  figured  was  bought  from  jobbers  at  a  price  equivalent  to 
approximately  85  percent  of  the  price  paid  for  cream  in  the  form  of 
fluid-milk.  If  these  dealers  had  obtained  this  cream  from  milk  pur- 
chased at  the  current  fluid-milk  prices  paid  producers  in  the  Chicago 
district  during  1924,  the  margin  of  the  22-percent  cream  would  have 
been  reduced  by  about  85  hundredths  of  a  cent  a  quart  of  milk  plus 
the  extra  expenses  of  separating. 

By-Products. — Prices  realized  for  by-products  in  the  Chicago  mar- 
ket in  1924  were  high  enough  to  yield  the  average  dealer  a  fair  return 
provided  his  volume  was  not  too  small.  It  is  more  or  less  essential 
that  all  dealers  supply  their  trade  with  these,  since  certain  consumers 
confine  their  milk  and  cream  purchases  to  dealers  who  handle  them. 

Information  such  as  the  foregoing  indicates  to  dealers  the  kinds 
of  products  which  it  would  be  to  their  advantage  to  push  by  advertis- 
ing or  otherwise.  It  is  of  value  to  dairy  councils,  producer  organiza- 
tions, and  other  agencies  interested  in  increasing  the  sale  of  milk, 
since  the  prices  that  different  markets  can  pay  for  milk  are  influenced 
by  the  sales  ratios  among  the  various  profitable  or  unprofitable  sales 
units.  The  data  given  in  Tables  21  and  24,  showing  the  ratios  of 
pints  to  quarts  and  milk  to  cream  in  the  four  markets  covered  in  this 
study,  are  of  special  interest  in  this  connection. 

Outlook  for  Distribution  Costs 

Up  to  this  point  the  discussion  has  been  based  on  data  for  various 
periods  extending  in  some  cases  to  as  recent  a  time  as  the  mid-part 
of  1928.  Many  important  facts  about  the  milk  business  have  been 
brought,  in  a  general  way,  to  the  reader's  attention.  Production  areas, 
as  well  as  the  markets  have  been  analyzed.  The  agencies  and  instru- 
mentalities of  distribution  have  been  discussed.  Trends  in  consump- 
tion have  been  determined,  whenever  sufficient  data  were  available, 
which  should  give  at  least  a  general  idea  of  what  may  be  expected 
in  the  future.  Conditions,  however,  do  not  remain  static,  but  new 
developments  and  additional  improvements  continue  to  appear.  Ab- 
solute predictions  as  to  the  future  are  therefore  impossible,  altho  a 
study  of  the  past  reveals  certain  facts  of  value  when  planning  for 
the  future. 

Since  1927,  the  last  year  for  which  financial  data  are  presented, 
distribution  costs  as  a  whole  have  been  increasing.  Two  factors  are 
mainly  responsible  for  this  situation :  a  demand  by  the  public  for  a 
safer  and  better  milk  supply  and  increases  in  the  wage  rate.  More 
stringent  health  regulations  have  either  been  passed  or  are  contem- 


1988}  MILK  DISTRIBUTION  IN  FOUR  ILLINOIS  MARKETS  263 

plated  for  the  near  future.  A  new  ordinance  became  effective  in  St. 
Louis  in  April  of  this  year  (1928),  requiring  a  product  of  higher 
quality  and  thereby  necessitating  additional  expense  for  distribution. 
Peoria  likewise  has  passed  such  an  ordinance.  On  May  1,  1927,  as 
previously  stated,  wages  in  the  Chicago  district  were  increased  $5 
a  week  for  all  unionized  employees  in  milk  establishments.  As  the 
margin  between  producer  and  consumer  prices  in  this  market  re- 
mained practically  the  same  in  1927  as  it  was  in  the  two  previous 
years,  profits  must  have  been  reduced  unless  dealers  were  able  to 
balance  the  increased  expense  by  more  efficient  marketing.  (Deal- 
ers' margins  for  the  years  1908  to  1927  inclusive  are  shown  in  Table 
47  of  the  Appendix.) 

There  are  a  few  factors,  on  the  other  hand,  that  tend  to  reduce 
present  distribution  costs,  tho  they  do  not  amount  to  much  in  the 
aggregate.  The  more  extensive  use  of  tank  cars  has  enabled  dealers 
to  ship  milk  at  lower  rates,  but  this  is  small  as  compared  with  the 
increases  in  other  distribution  costs  that  have  taken  place,  for  the 
total  cost  of  transportation  has  never  made  up  a  large  part  of  the 
total  distribution  costs. 

The  fact  that  increases  in  the  cost  of  distribution  have  not  always 
been  met  with  proportionate  increases  in  the  dealers'  margins  has 
made  it  difficult  for  dealers  with  only  a  small  volume  of  business  to 
survive.  Hence  bankruptcies  and  mergers  have  been  rather  frequent, 
and  the  result  has  been  that  greater  volume  per  dealer  has  slightly 
reduced  overhead  costs. 

With  the  increasing  insistence  upon  a  product  of  better  quality  and 
with  no  apparent  evidence  of  a  reduction  in  dairy  wages,  there  appears 
to  be  scarcely  any  possibility  of  a  reduction  in  distribution  costs  within 
the  near  future  unless  duplication  in  marketing  can  be  substantially 
reduced,  making  possible  a  larger  volume  of  distribution  per  unit  of 
marketing  machinery,  or  unless  entirely  new  systems  of  distribution 
are  evolved. 

FACTORS  AFFECTING  DEALERS'  MARGINS 

Marketing  costs  vary  with  different  markets.  To  account  for  the 
variations  between  markets,  it  is  necessary  to  become  familiar  with 
the  factors  that  influence  them.  One  approximate  measure  of  market- 
ing costs  often  used  is  the  margin  between  the  price  paid  the  producer 
for  a  quart  of  milk  and  the  retail  price  paid  by  the  consumer.  This 
difference  is  often  termed  the  dealer's  margin.  In  Chicago  from  1922 
to  1927  this  margin  averaged  between  8  and  8.8  cents  on  a  yearly 
basis  (Table  47,  Appendix). 

A  much  more  accurate  measure  of  total  distribution  costs  would  be 
the  gross  margin  between  the  cost  of  all  milk  purchased  in  a  market 


264  BULLETIN  No.  318  [December, 

and  total  receipts  from  its  sale.  Such  data,  however,  are  not  readily 
available  and  the  less  accurate  measure  is  generally  employed.  Re- 
gardless of  its  inaccuracy,  however,  it  may  be  of  practical  value  when 
making  approximate  comparisons  provided  it  is  used  with  discretion. 
One  error  especially  that  must  be  avoided  when  comparing  districts 
is  the  use  of  station  milk  prices  to  calculate  the  margin  in  one  district 
and  city  prices  in  another,  for  the  difference  between  these  two  prices 
is  usually  large  enough  to  render  such  a  comparison  very  misleading. 
Following  is  a  discussion  of  some  of  the  more  important  factors, 
affecting  dealers'  margins. 

Intensity  of  Dairying 

Differences  in  the  degree  of  intensity  in  dairy  production  in  the 
various  districts  has  already  been  noted.  In  the  territory  supplying 
Chicago,  approximately  35,000  gallons  or  more  of  milk  is  produced 
annually  per  square  mile,  while  in  the  Peoria  district  the  production 
per  square  mile  is  only  approximately  6,000  gallons  (Fig.  3).  The 
average  daily  production  of  milk  per  dairy  was  approximately  290 
pounds  in  the  Chicago  district  and  only  112  pounds  in  the  St.  Louis 
district  (Table  4).  Under  such  conditions  receiving  stations  in  the 
St.  Louis  section  would  normally  handle  a  smaller  volume  and  hence 
station  overhead  charge  would  be  higher.  From  the  standpoint  of 
these  and  other  related  considerations  purchasing  costs  would  there- 
fore be  much  greater  in  the  less  intense  dairy  district. 

Another  important  advantage  in  an  intense  dairy  district  is  its 
adaptability  to  the  use  of  the  tank  car.  Since  the  tank  car  has  a 
rated  capacity  of  50,000  pounds,  little  if  any  economy  could  be  effected 
by  its  use  in  other  than  intense  production  sections.  The  tank-car 
rates  for  a  minimum  of  40,000  pounds  over  distances  of  25  to  275  miles 
ranged  from  52.3  percent  to  70  percent  of  the  less-than-carlot  rate  for 
10-gallon  cans  of  milk  for  the  same  distance  (Table  7). 

Transportation  Advantages 

Surfaced  roads  and  rail  facilities  are  the  more  important  transpor- 
tation advantages  affecting  dealers'  margins.  Illinois'  system  of  paved 
roads  makes  it  practical  for  a  large  portion  of  the  milk  supply  pro- 
duced within  a  radius  of  75  miles  of  the  markets  to  be  trucked.  As 
these  roads  are  rather  uniformly  distributed  thruout  the  state,  differ- 
ences in  trucking  cost  among  different  markets  on  a  mileage  basis 
are  small. 

In  most  large  markets  the  bulk  of  the  milk  produced  beyond  a 
radius  of  75  miles  is  transported  by  rail.  Altho  rail  facilities  are  very 
good  for  the  state  as  a  whole,  some  markets,  owing  to  location  and 
larger  capacity,  have  greater  advantages  than  others. 


1928]  MILK  DISTRIBUTION  IN  For;;  ILLINOIS  MARKETS  2t'>."> 

Disregarding  the  manner  in  which  milk  is  transported  to  market, 
we  may  say  that  costs  increase  roughly  in  proportion  to  increases  in 
distances  to  market.  It  is  evident  that  it  will  cost  relatively  more  to 
transport  milk  to  market  in  the  Chicago  district,  in  which  the  maxi- 
mum haul  is  361  miles,  than  in  the  Peoria  and  Quincy  sections,  where 
the  maximum  hauling  distance  is  approximately  50  miles.  Further- 
more, when  dairy  sections  are  located  great  distances  from  markets, 
the  necessity  of  operating  country  receiving  stations  adds  to  the  ex- 
pense. 

The  geographical  location  of  certain  markets  forces  them  to  extend 
their  operations  much  farther  than  the  average  market  of  similar 
capacity.  Chicago,  with  Lake  Michigan  as  its  eastern  boundary,  is 
illustrative  of  such  a  market. 

Butterfat  Content  of  Milk 

The  amount  of  butterfat  in  milk  has  a  decided  influence  upon 
dealers'  margins.  As  shown  in  Fig.  7.  the  cost  per  unit  of  butterfat 
decreases  as  the  test  increases.  For  example,  if  the  base  fluid-milk 
price  is  $2.50  per  hundredweight  with  a  4-cent  differential  operating 
above  or  below  a  3.5-percent  butterfat  standard,  100  pounds  of  milk 
containing  3  percent  of  butterfat  would  have  a  value  of  $2.30,  a  rate 
of  76.67  cents  for  each  pound  of  butterfat  contained  therein.  The 
same  amount  of  milk  with  a  4-percent  butterfat  content  would  be 
valued  at  $2.70,  a  rate  of  67.5  cents  per  pound  of  butterfat.  One 
hundred  pounds  of  32-percent  cream,  when  separated  from  the  3-per- 
cent milk  purchased  at  the  above  price,  would  cost  the  dealer  $24.53 
minus  the  value  of  the  skim  milk.  An  equal  amount  of  cream  when 
separated  from  the  4-percent  milk  would  cost  $21.60  minus  the  sales 
value  of  the  skim  milk.  In  the  first  case  there  would  be  967  pounds  of 
skim  milk;  in  the  latter  700  pounds,  a  difference  of  267  pounds. 
Should  the  dealer  sell  the  skim  milk  at  20  cents  per  hundredweight,  he 
would  receive  53  cents  more  for  the  skim  milk  from  the  3-percent  milk 
than  from  the  4-percent  milk.  The  difference  between  the  cost  of  the 
cream  from  the  two  sources,  irrespective  of  the  skim-milk  value,  is 
$2.93.  This  amount  minus  the  difference  in  the  estimated  value  of 
the  skim  milk  (53  cents),  equals  $2.40.  which  is  undoubtedly  a  sub- 
stantial saving  to  realize  on  100  pounds  of  32-percent  sweet  cream. 
As  the  milk  tests  higher,  the  saving  becomes  greater.  Five-percent 
milk  compared  with  3-percent  milk  yields  a  saving  of  $3.84  on  100 
pounds  of  32-percent  cream. 

Not  only  is  milk  that  is  high  in  butterfat  more  economical  as  a 
source  of  sweet  cream  for  the  trade,  but  it  is  evident  that  it  is  also 
more  economical  as  a  source  of  whole  milk  provided  standardization 
of  milk  is  permitted  in  the  market.  It  is  obvious  from  the  above  that 


266  BUU.ETJN   No.  .", Is  [Dcconiit /•. 

distributors,  in  markets  where  the  milk  produced  has  a  low  butterfat 
content,  require  a  relatively  larger  margin.  The  Quincy  district  pro- 
duced milk  with  the  highest  percentage  oL'  butter J'at,  ranging1  during 
the  year  1925  from  3.61  percent  to  4.06  percent.  In  the  Chicago 
district,  where  the  butterfat  content  is  lowest,  the  range  during  1926 
was  between  3.43  percent  and  3.68  percent.  (Table  5) 

The  foregoing  discussion  has  to  do  with  the  butterfat  content  of 
the  milk  as  purchased  from  the  dairy  farm.  The  percentage  of  butter- 
fat  in  the  milk  that  is  delivered  to  the  trade  is  also  of  economic  im- 
portance. Since  butterfat  is  the  most  expensive  portion  of  milk,  it  is 
clear  that  larger  margins  are  required  in  markets  which  distribute 
milk  with  the  higher  percentage  of  butterfat,  provided  all  other  condi- 
tions are  relatively  the  same,  than  in  those  distributing  milk  of  low 
butterfat  content.  About  the  only  basis  we  have  for  comparing  the 
butterfat  content  of  the  milk  as  delivered  in  the  different  markets 
is  the  butterfat  content  most  generally  prevailing.  In  Chicago  during 
the  past  yeaT,  it  has  been  estimated  as  having  been  approximately 
3.5  percent;  in  Peoria,  3.7  percent;  and  in  St.  Louis,  3.8  percent. 
These  figures  may,  however,  change  at  any  time. 

Surplus  Milk 

The  volume  of  surplus  milk  which  a  dealer  must  carry  necessarily 
influences  the  margin  he  must  allow  for  expenses. 

Generally  speaking,  in  districts  where  flat  prices  are  paid  for  all 
milk,  losses  on  the  principal  surplus  products,  such  as  condensed  and 
evaporated  milk  and  butter,  generally  must  be  borne  by  dealers  unless 
fluid-milk  prices  are  practically  as  low  as  prices  paid  by  established 
dairy  manufacturers.  Profits  on  the  milk  sold  to  the  regular  trade 
must  be  depended  upon  to  absorb  the  losses.  AYhen,  however,  fluid- 
milk  prices  are  reduced  to  the  level  of  manufacturing  prices,  the 
fluid-milk  producer  can  well  afford  to  shift  to  dairy  manufacturing 
markets,  since  the  cost  of  producing  milk  for  manufacturing  purposes 
is  generally  less  than  producing  it  for  fluid  consumption.  Such  a 
price  reduction  would  therefore  result  in  an  insufficient  supply  of  milk 
for  fluid  consumption,  and  it  is  mainly  for  this  reason  that  fluid- 
milk  prices  paid  producers  are  generally  somewhat  higher  than  those 
paid  by  manufacturers.  (For  comparison  of  milk  prices  paid  by  milk 
dealers  and  manufacturers,  sec  Tables  .'IS.  40.  49,  50,  51,  and  52.) 

In  markets  which  have  a  price  plan  and  which  pool  their  milk, 
the  pool  price  becomes  higher  or  lower  with  decreases  or  increases  in 
surplus,  owing  to  the  fact  that  the  surplus  is  purchased  at  manufactur- 
ing prices. 


1928}  MILK  DISTRIBUTION  ix  FOUR  ILLINOIS  MARKKTS  267 

Standard  of  Milk  Quality 

The  serious  consequences  which  result  from  dipping  milk  from  the 
can  of  the  distributor  to  the  pail  of  the  consumer  and  from  the  con- 
sumption of  raw  milk  produced  under  ordinary  circumstances  are 
now  generally  recognized.  This  is  one  of  the  reasons  why  pasteurizing 
and  bottling  of  milk  are  practiced  to  a  greater  or  loss  extent  in  all  the 
larger  markets.  Precautionary  methods,  however,  which  influence 
sanitation  and  efficiency  in  pasteurization,  vary  and  consequently  there 
arc  differences  in  processing  costs  among  markets. 

Public  demands  as  enforced  thru  regulatory  measures  of  municipal 
health  departments  differ  with  locality.  The  maximum  bacterial 
count  permitted  in  the  milk  supply  of  markets  is  not  uniform,  and 
neither  are  temperature  regulations  uniform.  In  general  the  larger 
the  market  the  stricter  the  regulations. 

Altho  improvement  in  milk  quality  tends  to  force  an  enlargement 
of  the  dealer's  gross  margin,  still  producers  and  distributors  are 
eventually  amply  repaid  by  the  greater  sales  which  result  from  in- 
creased per  capita  consumption. 

Proportion  of  Different  Units  Sold 

Not  all  volumes  nor  all  milk  products  are  sold  on  a  uniform  profit 
basis.  As  indicated  in  Table  37,  there  is  considerable  variation  in  the 
net  profits  from  the  various  units  in  which  milk  and  its  products  are 
sold.  Since  more  than  50  percent  of  the  dealer's  milk  supply  is  sold 
as  milk,  the  greater  portion  of  which  is  dispensed  to  the  trade  in  quarts 
and  pints,  the  difference  in  profits  between  pint  and  quart  sales  is 
a  very  important  factor  in  determining  what  the  margin  must  be  in 
any  particular  district. 

Of  equal  or  even  greater  importance  is  the  ratio  of  milk  to  cream 
sales,  if  the  margins  are  as  found  in  the  Chicago  market.  The  varia- 
tions among  markets  in  volume  and  product  sales  have  been  discussed 
on  pages  225.  230.  and  231. 

Wages 

The  effect  of  wages  upon  distribution  costs  has  been  previously 
discussed,  and  their  influence  upon  margins  is  so  evident  that  it  hardly 
warrants  any  further  elucidation.  The  rate  of  wage  paid  for  dairy 
labor  varies  according  to  the  district,  irrespective  of  whether  labor  is 
organized  or  unorganized.  In  the  unorganized  districts  local  supply 
and  demand  and  custom  determine  the  wage  rate  for  the  district.  In 
the  unionized  markets  the  rate  apparently  depends  not  so  much  upon 
supply  and  demand  as  it  does  upon  the  strength  of  the  local  union 
organization  and  the  amount  of  support  given  its  policies  by  the 
public.  Altho  both  the  St.  Louis  and  Chicago  markets  employ  union 


268  BULLETIN-  Xo.  318  [December, 

labor,  wages  in  Chicago  are  substantially  higher  than  in  St.  Louis.  As 
mentioned  previously,  retail  milk  drivers  in  Chicago  receive  a  salary 
of  $50  a  week  plus  commissions,  while  in  St.  Louis  they  receive  $35.75 
plus  commissions.  The  proportion  which  wages  constitute  of  total 
distribution  costs  in  various  markets  has  been  discussed  on  pages  247 
to  249  and  shown  in  Tables  31  to  o5. 

Efficiency  and  Net  Profit  of  the  Dealer 

The  efficiency  of  the  milk  dealer  and  the  net  profit  retained  by 
him  are  largely  determined  by  the  intensity  of  competition  in  the  busi- 
ness. In  most  markets,  as  competition  has  become  more  intense  a 
higher  degree  of  efficiency  has  been  developed  and  the  general  level 
of  profits  has  been  lowered.  The  inability  of  the  inefficient  distributor 
to  confine  his  expenses  within  the  limits  of  the  margin  of  the  district 
has  left  the  field  in  control  of  the  more  efficient,  thus  increasing  the 
volume  of  business  per  dealer  and  reducing  overhead  costs.  Local 
conditions  result  in  varying  degrees  of  efficiency  in  the  different 
markets,  and  this  is  reflected  in  the  margins.  Net  profits  are  also 
reflected  in  the  margin;  in  the  four  markets  under  discussion  these 
varied  from  1.74  to  5.12  percent  of  the  net  sales. 

Miscellaneous 

Among  miscellaneous  factors  those  that  appear  to  be  the  most  out- 
standing are  investment,  per  capita  consumption,  and  service,  in- 
cluding also  the  delivery  and  housing  system,  all  of  which  differ 
among  markets  and  hence  are  partly  responsible  for  variations  in 
margins  between  markets. 

Investments  essential  to  the  operation  of  milk  distributing  estab- 
lishments, as  would  be  expected,  are  higher  in  the  larger  cities  for 
reasons  that  are  generally  well  known.  With  respect  to  per  capita 
consumption  it  may  be  said  that  other  things  being  equal,  the  higher  it 
is  the  lower  the  margin  that  can  be  accepted,  as  higher  per  capita  con- 
sumption means  not  only  a  larger  volume  per  market  but  also  that  a 
relatively  smaller  number  of  pints  will  need  to  be  delivered.  With 
respect  to  service,  delivery,  and  the  prevailing  housing  system,  it  is 
obvious  that  if  a  greater  portion  of  the  population  is  housed  in  large 
apartment  buildings,  fewer  stops  will  have  to  be  made  by  the  delivery 
man. 


SUMMARY  AND  CONCLUSIONS 

Milk  marketing  in  Illinois  has  undergone  some  very  material 
changes  during  the  past  two  decades.  The  boundaries  of  production 
districts  have  been  extended  farther  and  farther  from  the  larger 
centers  of  consumption.  Improvements  in  transportation  have  les- 
sened the  perishability  of  milk  in  shipment  and  have  relatively  re- 
duced transportation  costs.  This  expansion  in  area  has  increased 
the  competition  of  producers  located  close  to  the  consuming  markets. 

The  quality  of  milk  has  generally  improved,  in  response  to  con- 
sumer preference.  At  least  70  percent  of  the  fluid  milk  now  dis- 
tributed in  most  of  the  larger  markets  of  Illinois  is  pasteurized ;  most 
of  our  larger  cities  have  adopted  ordinances  which  make  pasteuriza- 
tion compulsory  and  require  that  milk  come  from  herds  free  from 
tuberculosis.  Municipal  health  bureaus  have  been  established  to  en- 
force these  provisions  and  others  aiming  at  a  better  and  safer  milk 
supply. 

Costs  of  distributing  milk  have  increased,  and  hence  the  margin 
between  prices  paid  producers  and  those  paid  by  consumers  has  in- 
creased. These  higher  costs  reflect  a  higher  wage  level,  as  well  as 
increased  complexity  in  the  milk  marketing,  improvement  in  milk 
quality,  and  expansion  of  the  dairy  production  districts. 

This  survey  was  undertaken  primarily  as  a  study  of  dealers '  costs 
and  margins  in  the  four  large  markets  for  which  Illinois  dairymen 
produce  milk.  The  study  extended  over  1925  and  1926  in  Chicago, 
1924  to  1926  in  St.  Louis  and  Peoria,  and  1924  to  1927  in  Quincy. 
Data  concerning  production  and  consumption  are  also  included  to  give 
a  representative  picture  of  the  general  field  of  fluid-milk  distribution. 

Milk  Production.  The  northern  part  of  Illinois  is  the  only  section 
of  the  state  where  dairying  is  extensively  carried  on  as  a  major  type 
of  farming.  Here  milk  production  per  farm  is  almost  twice  as  great 
as  that  in  any  other  Illinois  dairy  district.  During  the  season  of 
lowest  production  about  35,000  farms  produce  for  the  Chicago  market. 
Approximately  40  percent  of  the  total  supply  comes  from  Illinois 
farms.  The  remainder  comes  from  Wisconsin,  Indiana,  Iowa,  Michi- 
gan, Ohio,  and  Minnesota.  Production  data  for  the  Chicago  dairy 
district  based  upon  from  1,455  to  3,855  farms  beginning  with  1912 
show  a  rather  slow  increase  in  the  rate  of  production  per  farm  in  this 
district. 

Illinois  producers  supply  about  80  percent  of  the  total  amount  of 
milk  consumed  in  the  St.  Louis  market.  The  other  20  percent  is  pro- 
duced in  Missouri.  In  the  Quincy  district  approximately  90  percent 
is  supplied  by  Illinois  dairymen,  and  the  other  10  percent  by  Missouri 
dairymen. 

269 


270  BULLETIN  No.  318  [December, 

Production  was  largest  in  the  spring  months  in  eaeh  of  the  four 
districts  surveyed.  The  greatest  irregularity  in  seasonal  production 
of  milk  occurred  in  the  St.  Louis  district,  where  monthly  receipts  at 
dealers'  plants  ranged  from  62.3  percent  to  149  percent  of  the  average 
month  during  the  period. 

The  butterfat  content  of  the  milk  was  highest  in  the  St.  Louis  and 
Quincy  sections.  In  the  St.  Louis  district  the  monthly  average  ranged 
from  a  maximum  of  4.1  percent  to  a  minimum  of  3.5  percent ;  in 
Quincy,  the  maximum  was  4.06  percent  and  the  minimum  3.61  percent. 
The  Chicago  range  was  from  3.43  to  3.68  percent  and  the  Peoria  from 
3.45  to  3.93  percent. 

Transportation.  Practically  all  of  the  milk  supply  of  St.  Louis, 
Peoria,  and  Quincy  is  trucked  to  market.  Only  37  percent  is  trucked 
to  the  Chicago  market ;  of  the  remainder,  which  is  hauled  by  rail, 
55.5  percent  is  transported  by  tank  cars.  The  tank  car  has  played  a 
large  part  in  bringing  about  the  extension  of  the  Chicago  dairy  dis- 
trict that  has  occurred  the  last  five  years.  At  the  present  time  milk 
is  hauled  from  one  production  district  located  approximately  360 
miles  from  the  Chicago  market.  Tank  car  rates  from  27  shipping 
stations  to  Chicago  ranged  from  52.3  percent  to  70  percent  of  the 
10-gallon  can  rate  for  less  than  carlots. 

Milk  Consumption.  The  daily  per  capita  consumption  of  fluid 
milk  in  Chicago  in  1927  was  .801  pint ;  in  St.  Louis,  .666  pint ;  in 
Peoria  the  daily  per  capita  consumption  of  fluid  milk  and  cream  com- 
bined was  .681  pint. 

With  the  exception  of  St.  Louis,  milk  sales  as  a  whole  were  lowest 
during  July  and  August  in  all  four  markets.  In  Chicago  sales  during 
each  of  these  two  months  were  about  3  percent  below  the  average 
month.  In  Peoria  and  Quincy,  July  sales  were  less  than  4  percent 
below  the  average  month,  while  August  sales  were  approximately  Qy2 
percent  below.  In  St.  Louis.  December  and  January  were  the  low 
months. 

Cream  sales  were  somewhat  more  irregular  than  milk  sales.  July, 
August,  and  September,  were  the  months  of  lowest  sales.  The  greatest 
irregularity  occurred  in  the  St.  Louis  market,  where  sales  for  different 
months  ranged  from  78.4  percent  to  111.8  percent  of  the  average. 

There  was  considerable  variation  in  milk  sales  between  days  of  the 
week.  Maximum  and  minimum  quart  sales  in  Chicago,  expressed  in 
percentages  of  average  daily  sales,  were  117.6  percent  on  Monday,  96.1 
percent  on  Saturday;  in  St.  Louis,  107.9  percent  on  Saturday,  87.5 
percent  on  Sunday ;  in  Peoria,  103.5  percent  on  Saturday,  98.0  per- 
cent on  Tuesday ;  in  Quincy,  107.9  percent  on  Tuesday,  and  87.8  per- 
cent on  Sunday. 

Sunday  sales  of  32-percent  cream  in  the  Chicago  and  St.  Louis 
markets  were  approximately  2%  times  average  daily  sales;  in  Peoria 


19S8]  MILK  DISTRIBUTION  ix  FOUR  ILLINOIS  MARKETS  271 

they  were  approximately  3.7  times  the  average;  while  in  Quincy 
they  were  about  1%  times  average  sales.  Altho  Sunday  sales  of  22-. 
percent  cream  were  largest  in  all  the  markets  except  Quincy,  they  were 
not  over  11/3  times  the  average  sales.  Quincy  sales  were  highest  on 
Tuesday  (109.1  percent  of  the  average). 

Surplus  Milk.  The  Chicago  market  carries  less  surplus  milk  than 
formerly.  Only  the  very  largest  dealers,  whose  demands  for  cream 
were  so  large  that  they  could  not  be  supplied  by  jobbers,  carried  any 
appreciable  amount  of  surplus.  Figures  based  on  approximately 
one-third  of  the  district  show  that  the  percentage  of  surplus  in  1927 
was  less  than  half  of  that  carried  in  1921. 

In  Peoria,  where  surplus  milk  is  purchased  at  the  level  of  prices 
paid  by  manufacturers,  the  net  pool  price  paid  producers  becomes 
higher  or  lower  with  decreases  and  increases  in  surplus  milk.  During 
1927  the  least  surplus  was  produced  in  January,  23.07  percent ;  and 
the  largest  amount  in  June.  58.73  percent. 

Dealers'  Xet  Margins.  Data  pertaining  to  the  net  margins  realized 
upon  various  retail  sales  units  sold  in  the  Chicago  market  indicate 
that  milk  quarts  yielded  a  profit  of  .75  of  a  cent  and  that  milk  pints 
were  sold  at  a  loss  of  1.56  cents  each.  In  Chicago  the  ratio  of  pint 
to  quart  retail  sales  was  found  to  be  1  to  5.62  ;  in  St.  Louis,  1  to  6.11 ; 
and  in  Peoria  1  to  5.9. 

Sweet  cream  was  one  of  the  most  profitable  milk  products  handled 
by  Chicago  distributors  in  1924.  When  purchased  at  cream  jobber 
prices,  one-half  pint  of  22-percent  cream  sold  at  retail  returned  the 
milk  distributor  a  profit  of  1.73  cents.  The  ratio  of  milk  to  cream 
sales,  computed  on  the  basis  of  3. 5-percent  milk,  was  found  to  be  for 
Chicago.  2.39  to  1 ;  for  St.  Louis.  3.21  to  1  ;  and  for  Peoria,  4.22  to  1. 

The  Consumer's  Dollar.  The  average  dollar  spent  by  the  con- 
sumer for  wholesale  and  retail  milk  in  the  four  markets  studied  was 
distributed  as  follows  during  the  two-year  period  1925-1926:  cost  of 
product,  46.90  cents;  purchasing,  receiving,  and  processing.  14.89 
cents;  selling  and  delivery  expense,  31.21  cents;  general  and  ad- 
ministrative, 3.58  cents;  and  net  income.  3.42  cents.  (Fig.  17.  page 
244).  The  distribution  of  the  consumer's  dollar  in  eacli  of  the  four 
markets  is  shown  in  Table  29,  page  242. 

Tlie  Consumer's  Quart  Price.  A  large  portion  of  the  Chicago 
milk  distribution,  at  least  95  percent  of  which  was  dispensed  to  the 
retail  trade,  was  sold  during  1925  and  1926  at  an  average  price  of 
12.91  cents  a  quart.  Of  this  amount  5.33  cents  was  paid  to  the  pro- 
ducer; 2.20  cents  was  for  expenses  of  purchasing,  receiving,  and 
processing;  4.60  cents  was  for  selling  and  delivery  expense:  .31  cent 
was  for  general  and  administrative  expense;  and  .47  cent  was  the 
net  income  realized  by  the  distributor.  (Table  30,  page  246). 


272  BULLETIN  No.  318  [December, 

Analysis  of  the  Dealers'  Expense  Dollar.  An  analysis  of  the  ex- 
.  pense  dollar  reveals  considerable  range  in  the  four  markets,  as  shown 
in  Table  31,  page  247.  The  largest  part  of  the  expense  dollar  was 
used  in  defraying  the  expenses  of  labor  salaries  and  commissions.  In 
Chicago  during  1925  to  1926,  65.11  cents  of  each  dollar  was  used  for 
these  expenses.  In  Peoria  where  expenses  for  this  purpose  were 
lowest,  43.56  cents  of  each  dollar  was  required  during  1924  to  1926. 

Expenses  for  processing  and  operating  materials  and  supplies 
made  up  the  second  largest  portion  of  the  expense  dollar.  They 
ranged  from  10.81  cents  to  19.04  cents  in  the  four  markets.  The  re- 
mainder of  the  dollar  covered  depreciation,  transportation,  repairs, 
maintenance,  and  construction,  supplies,  taxes,  insurance,  and  other 
expenses,  as  shown  in  Table  31,  page  247. 

Dealer's  Gross  Margin.  In  the  Chicago  market  the  average  yearly 
margin  between  the  price  paid  producers  for  their  milk  and  the  retail 
quart  price  (which  difference  is  often  termed  the  dealer's  gross 
margin)  was  8.7  cents  in  1925  and  8.5  cents  in  1926.  In  1927  it 
averaged  8.6  cents.  The  increase  from  the  gross  margin  of  twenty 
years  ago  (4.7  cents  in  1908)  is  largely  the  result  of  increased  com- 
plexity in  milk  marketing,  of  wage  increases,  expansion  of  the  dairy 
production  district,  and  improvements  in  milk  quality,  as  stated 
above. 

Significant  Changes  in  the  Dairy  Industry.  The  above  facts  in- 
dicate to  the  investigator  that  two  economic  changes  of  far-reaching 
consequence  to  Illinois  dairymen  are  in  process ;  namely,  decentraliza- 
tion in  production  and  centralization  in  distribution.  Decentralization 
in  production  has  been  greatly  stimulated  by  recent  improvements  in 
milk  transportation  which  render  available  a  milk  supply  several  times 
larger  than  the  demand  of  the  fluid-milk  consumption  centers.  Dairy- 
men in  regions  several  hundred  miles  from  large  fluid-milk  markets, 
where  land,  wages,  and  taxes  are  relatively  cheap,  are  now  enabled  to 
compete  with  long-established  dairymen  in  districts  near  the  large 
cities,  where  land  prices,  labor  costs,  and  taxes  are  much  higher.  Some 
readjustment  to  this  particular  situation  is  already  in  progress  in 
northern  Illinois. 

In  contrast  to  production,  distribution  is  gradually  becoming  more 
centralized.  Economic  pressure  has  forced  more  efficient  methods  in 
milk  marketing.  Consolidation  of  distributing  agencies  has  been  one 
way  of  meeting  the  pressure  for  greater  efficiency.  Since  1923  a 
significant  number  of  Chicago  dealers  have  either  discontinued  their 
business  or  have  merged  with  others.  This  movement  toward  cen- 
tralization, providing  it  does  not  result  in  the  abuses  which  monopoly 
makes  possible,  decreases  overhead  expenses  and  places  a  larger  part 
of  milk  marketing  under  the  control  of  more  efficient  management. 


APPENDIX 


274 


BULLETIN  No.  318 


[December, 


TABLE  39. — SEASONAL  VARIATION  IN  PRODUCTION  PER  DAIRY,  CHICAGO  DISTRICT, 

1912-19261 
(Average  monthly  production  for  period  =  100)2 


Year 

Jan. 

Feb. 

Mar. 

Apr. 

May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

1912 

99  8 

103.9 

104  3 

109  4 

110.2 

117  7 

101  4 

92  2 

88.1 

88  9 

88  9 

95  2 

1913   .... 

92.0 

96.0 

96.0 

102.3 

117.4 

135.3 

104.3 

92.8 

88.1 

84.9 

90.1 

100.8 

1914 

102.7 

104.7 

107.7 

109.3 

120.0 

121.5 

95.5 

81.3 

81.7 

88.5 

91.6 

95.5 

1915 

99.1 

104.1 

106.8 

111.1 

120.3 

117.6 

101.8 

90.3 

84.5 

86.1 

86.1 

92.2 

1910 

102.5 

107.7 

110  4 

106.5 

120.7 

129.0 

106.5 

81.6 

82.0 

80.8 

82.4 

89.9 

1917 

110.2 

111  6 

112  9 

118  2 

122  2 

132  4 

111  6 

84  5 

70.2 

70  2 

74.7 

81  3 

1918   .... 

103.2 

103.7 

110.4 

112.0 

127.0 

136.9 

99.6 

72.1 

71.6 

74.7 

86.1 

102.7 

1919 

102.2 

109.6 

115.3 

118.9 

122.4 

126.8 

91.2 

77.2 

73.2 

80.3 

85.5 

97.4 

1920 

110.3 

112.9 

114.6 

112.9 

119.0 

126.0 

94.2 

73.2 

75.4 

79.3 

85.0 

97.2 

1921 

98.2 

104.  1 

108  4 

114  8 

124  2 

115  6 

91.7 

90  5 

84.5 

89.6 

84.9 

93.5 

1922 

102  8 

107  9 

109  6 

111  2 

125  6 

121  4 

92  2 

87  1 

80  4 

85  4 

85  0 

91  4 

1923  

99.2 

102.1 

106.2 

112.0 

121.5 

119.0 

98.7 

88.0 

87.2 

87.2 

86.3 

92.6 

1924 

91.9 

97.4 

103.2 

107.1 

120.0 

127.0 

107.9 

91.9 

91.1 

90.4 

84.1 

88.0 

1925 

92.8 

96.4 

98.2 

104.8 

121.0 

123.6 

106  7 

97.9 

90.6 

89.8 

86.5 

91.7 

1926  

113.1 

114.8 

108.4 

90.1 

111.4 

121.6 

105.0 

92.2 

90.5 

86.3 

83.7 

82.9 

'Trend  removed.  Data  arc  based  on  receipts  at  certain  milk  plants.  'Quantity  upon  which 
percentages  are  based  is  approximately  25  percent  of  Chicago's  total  milk  supply  for  the  fifteen- 
year  period. 


TABLE  40. — CLASS  PRICES,  CHECK-OFFS  AND  POOL  PRICES  OF  ILLINOIS  MILK 

PRODUCERS  ASSOCIATION,  PEORIA,  FOR  1928 

(Per  100  pounds) 


Month 

Class  1 

Class  2 

Class  3 

Association 
check-off 

Pool  price 
less  check-off 

January  

$2.70 

$2.04 

$1.94 

$0.06 

$2.41 

February  

2.70 

2.00 

1.90 

.06 

2.38 

March  

2.70 

2.09 

1.98 

.06 

2.36 

April  

2.70 

1.89 

1.79 

.06 

2.26 

May    

2.70 

1.82 

1.72 

.06 

2.15 

June    .... 

2.70 

1   81 

1.70 

.05 

2.06 

July  

2.70 

1.94 

1.83 

.06 

2.19 

2  70 

2  06 

1.95 

.06 

2.26 

2  70 

2   10 

2  00 

06 

2.28 

October  

2.70 

2.08 

1.98 

.06 

2.35 

Note. — Class  1  consisted  of  all  milk  sold  wholesale  and  retail  in  bottles,  as  fluid  milk  or  cream,  and 
all  bulk  milk  sales.  The  above  price  in  this  class  was  for  3.5-percent  milk  with  a  5-cent  differential 
operating  above  and  below  this  percentage. 

Class  2  included  all  milk  used  in  obtaining  fluid  sweet  cream  for  bulk  use,  excepting  the  milk  from 
which  cream  was  derived  for  butter  manufacture  or  for  the  manufacture  of  condensed  whole  milk 
and  soft  cheese  containing  butterfat.  Price  in  this  class  was  based  on  butterfat  content.  Price  per 
pound  of  butterfat  was  the  price  paid  for  butter  extras  on  the  Chicago  market  plus  3  cents. 

Class  3  consisted  of  all  milk  from  which  cream  was  derived  for  butter  manufacture  and  frozen  cream 
storage.  Price  was  determined  on  butterfat  content  same  as  for  Class  2  except  that  the  additional  3 
cents  was  excluded.  An  allowance  ranging  from  20  cents  to  30  cents  per  100  pounds  was  made  for  all 
skim  milk  resulting  from  cream  separation. 


1918} 


APPENDIX 


275 


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19X8] 


APPENDIX 


277 


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T4H     00 
-H     CO 

o  o 

oo  co 

0    0 

CO    —I 

-rf     »O 

2  S 

cC    tv 

06  d 

CS  1-1 
X  0 

O. 

00*    5 

CJ    --C 
CS    O 

CS    CO 

t^    CN 

•d  " 

00    i-^ 

1>   Cs 

O    CO 

-H      O 

CS    CO 

m  o 
co  in 

O  CN 

M 
o 
F« 

C3 

t-   CN 

t-    CS 

§8 

—    CO 

50  2 

06  to' 

CO    !>• 

CS   CO 

-H  d 

1"    00 

10    CO 
Cs   •* 

^  10 

CO  -H 

at 

IN    0 

CO    00 
t"»    CS 

C    0 

•<!<    Cs 

CO    O 

CO    O 

co  od 

CO    00 

O    CO 

06  •*" 

CS    O 

CS    IN 

-J<  CO 

iv  od 

O  1-1 

d 

cS 
HI 

-.    O 

in  CN 

CO    iO 

CO    CO 

d  in 

CS     .-H 

cs  co 

t^   CS 

CO    CS 

00      -H 

1-0    CO 

M'    CO 

00    C 

C:    t? 

CM     C: 

X    Ci 

ro  o 

X  O 

O 

•    <n 

il 

s  .-; 
•3  « 
O  w 

Chicago  
St.  Louis  

•    to 

I'l 

O  & 

11 

.-  " 

Chicago  
St.  Louis  

C    'A 

si 

CJ     9 

'2,  ^ 
*~f  ~-f 

Cultured  milk 
Gallons  

d 

3 

d 

£ 

Half-pints  

!   1 

3 

Cottage  cheese 

Pounds  

12-ounre  packages. 

278 


BULLETIN  No.  318 


[December, 


TABLE  44. — SHRINKAGE  OCCURRING  DURING  PROCESS  OF  DISTRIBUTION, 

CHICAGO  DISTRICT,  1925-1926 
(Based  on  an  average  monthly  distribution  of  about  17  million  pounds) 


Month 

Percentage  of  waste 
of  total  milk 
purchased 

January  

.65 

February  

.73 

March  .  .      .    .            ... 

44 

April    .             . 

1.10 

May  

1  08 

June  

1.07 

July  

.86 

August  

.85 

September  .      .                                  

1.02 

October  

.89 

.94 

December  

.78 

TABLE  45. — ALLOCATION  OF  RETAIL  SALES  POINTS  IN  CHICAGO  AND  ST.  Louis 
DISTRICTS,  JANUARY  1,  1928 


Chicago 

St.  Louis 

points 

points 

Certified  milk 

Quarts    

1 

2 

Pints  

1 

1 

Regular  and  cultured  milk 

Quarts  

1 

1 

Pints  

1 

y* 

Thirds  

y* 

3/10 

Half-pints  

y* 

y± 

Cream 

Quarts  

4 

4 

Pints  

2 

2 

Half-pints  

1 

1 

Quarter-pints  

y* 

Cocoa  drinks 

Quarts  

1 

Pints  

1 

Half-pints    

1A 

(Commissions) 

Cottage  cheese 

10-  to  16-ounce  containers  

$  .01 

i 

Butter 

Pounds  

01 

i 

Eggs 

Dozens  

.01 

1928} 


APPENDIX 


279 


TABLE  46. — BOTTLE  AND  OTHER  MILK-CONTAINER  LOSSES  IN  CHICAGO  DISTRICT, 

1926 


Number  of 
deliveries1 

Number  of 
replacements 
required 

Average  trips 
per  container 

Bottles 
Quarts  

61,165,832 

2,407,639 

25.4 

Pints  

22,206,562 

1,860,660 

11.9 

Third-quarts  ...                                  

36,841 

2,129 

17.3 

21,106,184 

925  586 

22  8 

Quarter-pints  

466,830 

34,956 

13.4 

Cheese  jars  

26,500 

8,000 

3.3 

199,002 

980 

203.1 

Cases  

6,190,475 

29,344 

211.0 

'Based  on  number  of  times  bottles  were  filled. 


TABLE  47. — DEALERS'  MARGINS  IN  CHICAGO  DAIRY  DISTRICT,  1908-1927 
(Figures  indicate  cents  per  quart  and  are  the  difference  between  price  paid  pro- 
ducers at  country  stations  and  retail  price  per  quart) 


Jan. 

Feb. 

Mar. 

Apr. 

May 

June 

July 

Aug. 

Sept. 

Oct. 

Nov. 

Dec. 

Average 

1908.  . 

4.7 

3.7 

3  7 

4.  1 

4  7 

5.0 

4.7 

4.3 

4.  1 

3  9 

3.7 

3.7 

4.2 

1909 

3.7 

3.7 

3.9 

4.0 

4  (i 

5.0 

4  7 

4.3 

4.  1 

3  7 

4  3 

4.2 

4  2 

1910  

4.2 

4.3 

4.7 

4.9 

5.4 

5.7 

5.4 

5.2 

5.0 

4.3 

3.9 

3.7 

4.7 

1911... 

3.7 

3.9 

4.3 

5.2 

5.6 

5.9 

5.2 

4.9 

4.9 

4.3 

4.0 

3.9 

4.7 

1912  
1913  

4.0 
4.2 

4.1 
4.3 

4.5 
4.6 

5.2 
4.8 

5.7 
5.3 

5.9 
5.5 

5.2 
5.1 

4.9 
4.8 

4.8 
4.7 

4.6 
4.2 

4.2 
4.0 

4.  1 
3.9 

4.8 
4.6 

1914  

3.9 

4.2 

4.5 

4.8 

5.3 

5.6 

5.1 

4.7 

4.7 

4.1 

3.9 

3.9 

4.0 

1915  

4.0 

4.2 

4.5 

4.9 

5.4 

5.6 

5.2 

4.7 

4.7 

4.  1 

3.9 

3.9 

4.6 

1916... 

4.0 

4.2 

4.5 

4.5 

4.9 

5.3 

4.7 

5.3 

5.3 

4  9 

4.5 

4.5 

4.7 

1917 

4  6 

4  7 

5  0 

4.8 

5.7 

6.6 

5.4 

5.1 

5.1 

5  6 

5.  1 

5.  1 

5.2 

1918  

5.1 

5.4 

5.8 

6.3 

7.6 

8.1 

7.1 

6.6 

(1.7 

5.9 

6.1 

5.9 

6.4 

1919  

5.9 

6.5 

6.6 

7.0 

8.6 

8.6 

7.6 

7.4 

7.4 

7.2 

7.3 

7.2 

7.3 

1920.  .  . 

7.3 

7.8 

7.8 

8.1 

8.2 

8.1 

8.1 

8.0 

8.0 

8.0 

8.4 

8.4 

8.0 

1921.. 

8.6 

8.9 

8.9 

8.9 

9.6 

9.6 

9.1 

9.1 

8.8 

8  2 

8.1 

8.1 

8.8 

1922  . 

8  1 

8  3 

8  3 

8.3 

8  3 

8.6 

7.7 

7  »> 

7.7 

7  li 

7.6 

7.5 

8.0 

1923 

7  6 

7.6 

7.8 

7.8 

8  1 

8  2 

8  1 

8  1 

S  1 

s  1 

S  1 

8.1 

8.0 

1924  

8.2 

8.2 

8.2 

8.6 

9.1 

9.1 

8.6 

8.4 

8.4 

8.8 

8.8 

8.8 

8.6 

1925  

8.8 

8.8 

8.8 

8.8 

8.9 

B.fl 

8.6 

8.5 

8.5 

8.5 

8.5 

8.6 

8.7 

1926  

8.6 

8.6 

8.6 

8.1 

8.6 

8.8 

8.6 

8.4 

8.4 

8.5 

8.6 

8.6 

8.5 

1927  

8.6 

8.6 

8.6 

8.6 

8.8 

8.8 

8.5 

8.6 

8.6 

8.6 

8.6 

8.6 

8.6 

280 


BULLETIN  No.  318 


[December, 


'> 

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, 

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3    o 


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19S8] 


APPENDIX 


281 


TABLE  48. — RATIO  OF  JOBBERS'  PRICES  OF  36-PERCENT  CREAM  TO  COST  OF  CREAM 

WHEN  PURCHASED  AS  3.5-PERCENT  MILK  IN  CHICAGO  DAIRY  DISTRICT 

(Cost  of  cream  when  purchased  as  fluid  milk  at  current  monthly 

station  price  =  100) 


Month 

1918 

1919 

1920 

1921 

1922 

1923 

1924 

1925 

1926 

75.0 

63.7 

81.8 

96.7 

99.4 

96.7 

85  2 

87  8 

92  5 

February.  .  .  . 
March 

75.3 
76.2 

88.3 
87.5 

86.4 
94.4 

94.0 
94.0 

104.8 
111.0 

92.5 
96.6 

82.5 
82.5 

87.8 
92.2 

92.5 
92.5 

April 

83.3 

04.7 

91.9 

96  0 

111  0 

96.6 

84  1 

92.2 

84  3 

May  
June  

108.0 
140.3 

100.9 
100.9 

101.3 
99.6 

102.9 
97.7 

104.8 
118.2 

100.5 
102.6 

91.4 
87.8 

94.0 
94.0 

88.3 
87.8 

Julv      

114.2 

98.1 

96.7 

91.4 

105.3 

88.1 

80.8 

88  3 

84  1 

99.6 

91  0 

83  6 

91  4 

102  9 

88   1 

78  5 

90  8 

80  7 

September.  .  . 
October  ...    . 

100.8 
91.9 

84.2 
81.0 

82.3 
73.8 

133.6 
108.0 

105.3 
108.0 

81.7 
81.7 

76.7 
79  0 

86.7 
90  8 

86.5 
90  8 

November.  .  . 
December.  .  . 

85.1 
86.4 

83.1 
83.7 

89.7 
96.9 

105.2 
105.2 

113.1 
117.5 

81.7 
83.0 

83.4 
96.6 

90.8 
92.5 

92.5 
96.7 

TABLE  50. — AVERAGE  PRICES  PAID  PRODUCERS  SUPPLYING  FLUID-MILK  DEALERS 

IN  PEORIA  AND  QUINCY  DISTRICTS,  1924-1927 
(Per  100  pounds  of  3.5-percent  milk  f.o.b.  city  plant) 


19 

24 

19 

25 

19 

26 

19 

27 

Month 

Peoria 

Quincy 

Peoria 

Quincy 

Peoria 

Quincy 

Peoria 

Quincy 

January  

$2.40 

$2.60 

$2.25 

$2.60 

$2.30 

$2.60 

$2.46 

$2.70 

February  

2.40 

2.60 

2.25 

2  60 

2.20 

2.60 

2.45 

2  60 

March  

2.40 

2  60 

2.15 

2  60 

2  20 

2  60 

2  44 

2  60 

April    .  .  . 

2  25 

2  50 

2   15 

2  50 

2   10 

2  50 

2  34 

2  50 

May  

2.00 

2.50 

2.00 

2.50 

2.00 

2.50 

2.02 

2.50 

June  

1.80 

2.50 

2.00 

2.50 

2.00 

2.50 

2.04 

2.50 

July  

1.80 

2.50 

2.00 

2  50 

2  00 

2  50 

2.10 

2.50 

August  

1.80 

2.50 

2.25 

2  50 

2  00 

2  50 

2.15 

2.50 

September  

1  80 

2  50 

2  10 

2  60 

2  00 

2  50 

2  31 

2.70 

October.  .  . 

1  80 

2  60 

2   10 

2  60 

2  23 

2  50 

2  34 

2  70 

1  90 

2  60 

2  20 

2  60 

2  31 

2  70 

2  38 

2  70 

December  

2.25 

2.60 

2.30 

2.60 

2.35 

2.70 

2.41 

2.70 

282 


BULLETIN  No.  318 


TABLE  51. — AVERAGE  PRICES  PAID  PRODUCERS  SUPPLYING  CONDENSARIES 

IN  EASTERN  SECTION  OF  NORTHERN-CENTRAL  STATES1 

(Per  100  pounds  of  3.5-percent  milk  f.o.b.  condensary) 

(Case  and  bulk  goods) 


Month 

1920 

1921 

1922 

1923 

1924 

1925 

1926 

1927 

January  

$3  57 

$2.04 

SI.  65 

$2.43 

$2.16 

$1.93 

$2.15 

$2.28 

February  

3  35 

1.98 

1.50 

2.40 

2.  12 

1.92 

2.06 

2.29 

March 

3  02 

2.05 

1.46 

2  34 

2.08 

1.94 

2.00 

2.21 

April  

2.86 

2.16 

1.46 

2.26 

1.89 

1.94 

1.94 

2.15 

May  

2.81 

1.94 

1.43 

2.04 

1.68 

1.90 

1.80 

2.00 

June  

2  69 

1.55 

1.42 

2.01 

1.60 

1.84 

1.79 

1.91 

July..      . 

2  98 

1.57 

1.58 

2.11 

1.61 

1.91 

1.77 

1.91 

3  21 

1.85 

1.70 

2.15 

1.63 

1.98 

1.82 

2.01 

3   14 

1  84 

1.74 

2.16 

1   62 

2.01 

1.93 

2.08 

October  

2.70 

1.84 

1.84 

2.18 

1.64 

2.08 

1.98 

2.16 

2  43 

1   85 

2  09 

2   18 

1   66 

2   12 

2  08 

2.21 

December  

2.24 

1.81 

2.35 

2.19 

1.85 

2.14 

2.21 

2.27 

'Prices  were  obtained  from  market  reports  issued  by  the  Bureau  of  Agricultural  Economics,  U.  S. 
Department  of  Agriculture. 


TABLE  52. — AVERAGE  MONTHLY  WHOLESALE  BUTTER  PRICES  PAID  FOR  EXTRAS 

IN  THE  CHICAGO  MARKET,1  1918-1927 

(Cents  per  pound) 


Month 

1918 

1919 

1920 

1921 

1922 

1923 

1924 

1925 

1926 

1927 

Ten-year 
average 

49 

60 

63 

48 

34 

50 

52 

39 

43 

48 

48.6 

49 

49 

63 

47 

37 

50 

49 

40 

43 

50 

47.7 

March  

41 

60 

66 

47 

38 

49 

46 

48 

42 

49 

48.6 

April  

42 

62 

64 

44 

37 

45 

37 

43 

38 

48 

46.0 

May  

42 

57 

57 

29 

34 

40 

37 

41 

39 

41 

41.7 

June.  .  . 

42 

51 

55 

32 

36 

39 

39 

42 

39 

40 

41.5 

July   . 

43 

51 

55 

39 

34 

38 

38 

42 

39 

40 

41.9 

45 

53 

54 

40 

33 

43 

37 

42 

40 

41 

42.8 

September  

55 

57 

57 

42 

39 

46 

37 

46 

43 

45 

46.7 

October  

56 

64 

57 

45 

44 

47 

37 

49 

46 

46 

49.1 

November  

62 

69 

60 

44 

50 

52 

42 

50 

49 

48 

52.6 

December  

67 

68 

51 

43 

53 

53 

42 

47 

53 

51 

52.8 

"Prices  obtained  from  1927  Yearbook,    U.  S.   Department  of  Agriculture,    with   the   exception   of 
January  and  February,  1918. 


.M  /    '    ' ' 


A 


UNIVERSITY  OF  ILLINOIS-URBANA 


